De-FAANGed

Investors are rethinking a strategy that's served them for the better part of a decade

- Jeran Wittenstein

Nine years ago, Jim Cramer-the gleefully loudmouthed CNBC pundit-introduced the world to what he called the FANG investment strategy. Facebook, Amazon, Netflix, and Google, his reasoning went, were as close to a sure bet as you could get as commerce, community, and content shifted online. A few years later the acronym was plumped up to FAANG with the addition of Apple Inc. Corporate rebrandings at Facebook and Google would end up messing with the spelling, and some insisted Microsoft Corp. should join the party. But the one constant was a sense of infinite optimism about the companies' ability to dominate their markets and continue growing at a breakneck pace, making huge sums of money for their shareholders.

These days the FAANGS-or whatever you might call them-are looking increasingly toothless. On April 19, Netflix Inc. shocked Wall Street when it announced that for the first time in a decade it had lost customers and predicted that even more would bail in coming months. Its shares fell more than a third that day. That followed Facebook's February meltdown after it revealed user growth had stalled. The company's stock suffered the biggest one-day loss in value in U.S. market history.

Facebook in October changed its name to Meta Platforms Inc. in an embrace of the so-called metaverse, but its market value has plummeted by about $500 billion from a September peak of almost $1.1 trillion-even after the company reported more upbeat user numbers on April 27. Netflix, which just two years ago was more valuable than Walt Disney Co., has seen its shares tumble more than 70% since November and is now worth less than half as much as Disney.