The coronavirus (COVID-19) pandemic has rocked world markets over the past month, sending share prices downward with ferocity not seen since the 2008 financial crisis.
As world economies shrink, so have the market caps of tech giants that led the US through its 11-year bull market. Facebook, Apple, Amazon, Alphabet, and Microsoft have together lost $1.3 trillion in value since markets peaked on February 19, CNBC reports.
While grim, it’s likely major tech firms make it through to the other side. It’s especially true for the newly emerged “stay-at-home” stocks — companies that fit into our new way of living, where social distancing and working from home are standard practice.
Obvious inclusions are Facebook, Amazon, and Netflix. With shelter-in-place directives imposed in US cities and similarly across Europe, it’s easy to imagine quarantinees would stream their entertainment instead of going to the cinema, catch up with friends online rather than meet at a bar, and order essentials straight to their door over risking contamination at the supermarket.
Coronavirus aside, FAANG is sitting on loads of cash
As share prices tank across the board, the name of the game is outperformance. Amazon is doing exactly that: As of Thursday, it’s fallen 16% since highs on February 20, while the S&P 500 is down almost 30% over the same time period.
JPMorgan analysts floated streaming monster Spotify, e-cycling startup Peloton, and social marketplace Ebay as other potential benefactors; e-commerce and subscription-based businesses were said to be “bright spots” in the COVID-19 consumer landscape.
Chinese tech powerhouse Tencent also recently said it expects its gaming businesses would allow it to weather the economic slowdowns brought on by the spread of COVID-19.
As for iPhone maker Apple, it sits on nearly $100 billion in cash reserves, which Financial Times noted is enough to fund its entire R&D and capital spending budgets for nearly four years, even if sales dried up completely.
In fact, Apple together with Alphabet, Microsoft, Facebook, and Amazon — the crew collectively known as FAANG (sans Netflix) — has over $350 billion in cash, money that will prove critical to surviving these unprecedented economic conditions.