(BFM Bourse) – The “FANGMAN”, an acronym which designates GAFAM as well as Netflix and Nvidia, have seen their combined valuation melt by more than 2,000 billion dollars since their respective high, and by 1,400 billion over the last three weeks.
Outperforming for years, the Nasdaq is currently experiencing its most severe correction (-14.2% compared to its record of November 29th) since March 2020, and this is fueled by the reflux of the heavyweights of the index, known by the acronym FANGMAN – namely GAFAM (Apple, Microsoft, Amazon, Google and Facebook) plus graphics card and chip giant Nvidia and entertainment giant Netflix.
Collectively, these flagships weighed 9.664 billion dollars at the close of this Friday, against 11.071 billion dollars at the close of January 3. In just three weeks, their market capitalization has therefore melted by more than 1.4 trillion dollars (-12.8%), the equivalent of more than half of the valuation of the 40 CAC groups combined. Since their respective peak, mainly reached at the end of November (early January for Apple, early September for Facebook), the market capitalization of FANGMAN has even fallen by 2.040 billion dollars.
Among these jewels, the most notable fall is to be attributed to Netflix, whose title literally collapsed on Friday (-21.8%) after results – and forecasts – deemed disappointing by the market. If the decline is less pronounced in percentage (-12.7%), Apple for its part erased nearly 400 billion dollars of capitalization over the period, after becoming the first group in the world to cross the 3,000 billion mark. valuation.
Monetary normalization faster than expected
In detail, the securities of all FANGMAN are currently in correction territory, and this should not improve on Monday as the futures contracts on the Wall Street indices foreshadow a new opening in the red for the Nasdaq Composite ( -1.3% at 2:40 p.m., i.e. 50 minutes before the start of trading).
Weighed down last week by the prospect of faster-than-expected monetary normalization by the Fed to counter galloping inflation, the markets gave in somewhat to panic on Monday. Between the meeting of the monetary policy committee of the American central bank which starts tomorrow and fears of an escalation of tensions between Moscow and Washington in Ukraine, operators are suddenly showing a pronounced aversion to risk. This primarily penalizes so-called “growth” stocks, which have already been neglected due to expectations of rate hikes in recent weeks. Thus, after years of notable outperformances of the American technology giants, “a rebalancing is certainly emerging on the equity markets” according to the deputy director of investments John Plassard, who advocates diversification.
The fall of the FANGMAN nevertheless remains to be put into perspective as their rise had previously been spectacular. For example, they had for the first time crossed the 6,000 billion capitalization in May 2020, and the current correction only causes this combined capitalization to drop to a low since last October.
Quentin Soubranne – ©2022 BFM Bourse
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