You’ve probably seen the big (FAANG) tech stocks crash…
With Netflix (NASDAQ: NFLX) down 32% and Meta Platforms (NASDAQ: FB) plunging 36% year to date.
The reason was due to quarterly financial reports – and weak growth outlook.
If you missed Part 1, read it here: Chart Reveals FAANG Winners and Losers (part 1)
However, there’s a bigger issue that’s being overlooked by most investors…
So, why are some big tech stocks charging higher? While others are crashing and hitting 52-week lows?
You see, there’s one big difference between the winners and losers.
The biggest tech stock winners OWN their own platform.
Here’s what I mean…
Apple has its own entire ecosystem. It offers hardware in the form of the iPhone, iPad, computers, iWatch and Apple TV. It also provides access to services across the platform through the Apple Store, iTunes, Apple TV, and iCloud. Once a user in in the Apple ecosystem, they tend to stay. It’s extremely sticky. Moving away from the platform is inconvenient.
Google’s search engine and pay-per-click business is perhaps the best in the world. Users love using Google to find information. And advertisers love connecting with consumers who are searching for products or information. The company smartly expanded its platform to include YouTube – the biggest video platform in the world. Plus, the company owns the Android operating system that powers 75% of the world’s smartphones.
Microsoft is an enterprise computing powerhouse. The company provides the software the runs most business in the world. Microsoft has invested heavily in the cloud and expanded into gaming and social networking. Microsoft faces the least regulatory risk among the big tech stocks – and it appears that the Activision acquisition will be approved by the FTC.
These three big tech stocks are NOT dependent upon other companies. They can succeed independently. Additionally, these are platforms that become stronger as they grow and expand.
Consider these three stocks compared with Facebook and Netflix – the two worst performers.
Netflix produces and licenses video content and sells it to members via a subscription service. The big variables for Netflix are the cost of content and the ability to profitably acquire and retain new customers. That means Netflix is dependent on companies that own video libraries… and its own ability to find more subscribers.
Netflix is feeling the pressure of rising video costs and higher advertising costs. And it’s being forced to raise prices on members to offset high costs. That in turn is expected to slow the company’s growth rate.
Facebook brought social media to the masses and now reaches over 70% of the world’s population. It’s been a good business for years. However, there’s been a ton of scrutiny over privacy, cyber bullying, misinformation, and the negative effects for children. The company has a lot of global regulators now breathing down their neck.
One big downside is that Facebook simply provides apps that run on other platforms – namely iOS and Android. And that means the company has very strong dependencies on Apple and Google. In January, we saw that Apple’s privacy changes will cost Facebook $10 billion per year in lost revenues. That’s a huge reason for the stock’s slump.
Tomorrow I’ll publish part 3 on the FAANG stock and outlook for 2022.
Inside I’ll dig into Amazon (NASDAQ: AMZN) – the one FAANG+M stock that I didn’t discuss in today’s issue.
Amazon is right in the middle – between the winners and losers. And it deserves a separate discussion.
Read Daily Profit tomorrow morning for details on what’s next for Amazon.
Some big tech stocks will continue rising in 2022. Others may face stiff headwinds.
That’s why I’m focused on uncovering the next generation tech stock winners. And buying these stocks could be like jumping into Apple, Google, or Netflix 10+ years ago.
They’re called MACE stocks.
Access my urgent LIVE webinar to discover:
- What exactly are MACE stocks – and why you have not heard of them
- When these MACE stocks could become household names
- Details on 5 of these next generation tech stocks
- How these stocks could crush FANG stocks in the next 3 years
- Why I’m planning to bet $100,000 of my personal savings on these stocks
Yours in Wealth,
Full Disclosure: Ian Wyatt owns shares of Facebook, Amazon, Apple, Netflix and Google.