For the United States based tech companies, 2019 has been a good year for growth so far even as US lawmakers have been contemplating the question – how big is too big.
Over the past six months, there has been a 25 per cent value enhancement in the market value of four of the five FAANG stocks — Facebook, Amazon, Apple and Netflix. There has been a 31 per cent growth in the stock price since the start of the year for Microsoft, which is presently the largest public tech company in the US and has a current market cap of more than $1 trillion.
The only major tech company form the list to miss out was Google parent company Alphabet which recorded a modest 3.6 per cent growth in stock price so far this year.
Of the FAANG stocks, the one to clock the highest rise was Facebook with a hike of more than 47 per cent in the six months into the current year and achieved a market cap of $550.9 billion. There has been a 37 per cent appreciation in the stock price of Netflix while a 25 per cent hike in the stock price of Apple was noted during the period.
At the same period, there has been greater criticism of the big tech companies by lawmakers and regulators in the US as well as elsewhere. The criticism against the companies is that they have grown too huge and are misusing their dominant market positions., one such critic has been the US presidential contenders such Massachusetts Senator Elizabeth Warren.
Even before the Warren’s policy proposal demanding breakup of the big tech companies, there have been similar arguments and demands. However, the prospect of such demands getting true has increased since early this month. After reports that US antitrust regulators were divvying up oversight responsibility over the companies, there was a fall in the stocks of Facebook, Alphabet, Amazon and Apple.
But despite these factors, investors have still shown confidence in the companies and in the staying power of the tech industry as indicated by the increase in the stock prices of all of the FAANG companies except Alphabet. In fact, there was a surge in the stock price of Facebook in April even after the company had announced that it was expecting to take a one time charge of up to $5 billion in relation to a possible fine related to a Federal Trade Commission’s investigation about its potential violation of a 2011 consent decree.
Other tech companies have also seen significant growth in stocks this year. For example, there has been explosive growth for Snap which is a much smaller company, with a $19.2 billion market cap, compared to the larger tech peers. In 2019, Snap’s stock has risen by about 160 per cent. A note from BTIG analysts earlier this month said that the bouncing back of Snap had potentially gone unnoticed by investors and many failed to notice the changes it had brought in by launching of new products and monetization opportunities.
(Adapted form CNBC.com)