Jim Cramer Says His FANG Tech Group Has Lost Its Magic
CNBC’s Jim Cramer said on Monday it was time to acknowledge that his Big Tech group of companies FANG – the acronym for parent Facebook Metaplatforms, Amazon, netflix and parent Google Alphabet which was first coined by the “Mad Money” host – are not infallible market leaders.
“FANG has become worthless as a name, acronym, amalgamation, out of boredom. No one cares anymore, and neither should they,” he said, adding, “The magic is gone. They have to play by the rules.”
Stocks fell on Monday ahead of a possible Federal Reserve interest rate hike and a busy week of earnings, including reports from Meta, Amazon and Alphabet.
Cramer said one of his main issues with FANG is that the companies are opaque, which doesn’t allow investors to make informed decisions about their stocks. He shared his concerns about each company:
- Meta: Investors have no idea where the company is because of its lack of communication. But the company’s roughly $386 billion market capitalization, which is lower than it should be, is a reason to own the stock.
- Amazon: The stock will rise if the e-commerce giant lays off even more of its workforce after already cutting more than 18,000 jobs. If the company fails to take this step, its stock will plummet and the company will become unworthy of its $1 trillion market capitalization.
- Netflix: Although the company is the only name in the group doing well, its market cap of around $157 billion means it’s too small to matter.
- Alphabet: Google’s parent company is largely an advertising company, which has been hit hard by the slowing economy, but remains unclear about the challenges it likely faces.
Cramer said that Apple, which was added in recent years to the original acronym to create FAANG, is a more transparent company with an attractive price-earnings ratio. Investors who own the shares should hold on to their shares, he advised.
He added that his thoughts on FANG don’t mean he thinks the stocks aren’t worth holding.
“I’m not saying these companies are unimportant. They’re too big to ignore. What I’m saying is that FANG has worn down its welcome,” he said. “You have to make a decision on their value as businesses – not on earnings.”
Disclaimer: Cramer’s Charitable Trust owns shares of Meta, Amazon, Alphabet and Apple.