FANG stocks slip once again

What’s up in tech? Some if the biggest players (Facebook, Amazon, Netflix and Google) are getting hit the second day in a row, with Apple instrumental in the Dow dropping 14 points during trading today.

Some analysts aren’t fazed by the dip, because Tech has outperformed the S&P by about 9% and the drop is being attributed to profit-taking.

Tech stocks are still up around 14% for the year and maybe the markets are taking a breather from the run we’ve been experiencing since January.

Yesterday’s announcement of a Fed rate hike and the possibility of a three raises next year and three in 2019 to bring the rate to 3.0%, has made many nervous about the ease of financing for a capital-intensive sector.

Will it be another 2000 tech bubble or will a correction take place without cratering the market?

There is a definite disconnect between valuation and performance with tech right now as illustrated by Facebook whose SP had popped 33% for the year, but its estimated 2017 non-GAP earnings show an increase of 15.8%.

This isn’t as bad as it was back at the turn of the millennium, but it shows that a correction is still in order.

Most of what is going on now however is based on speculation of what’s going to happen, so we won’t have a clear picture until July when many tech companies will release earnings.

Hopefully any corrections will occur during this limbo and afford investors an easier and more accurate entry to tech investment by the end of the summer.

Tech companies have enjoyed a freedom from performance evaluations as they develop, but it would seem prudent to re-examine that stance in order to prevent more valuation disparities and potential market crashes in the sector.

Let’s see what happens tomorrow…

 

–Gaalen Engen

http://twitter.com/gaalenengen

 

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Braden Maccke
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Amazon down on Whole Foods acquisition.

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