These are the 2 Worst Performing FAANG Stocks of 2021 The FAANG stocks are known for their market dominance and generating steady returns irrespective of market conditions. However, FAANG components Amazon (AMZN) and Netflix (NFLX) underperformed the market last year....
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The FAANG stocks are known for their market dominance and generating steady returns irrespective of market conditions. However, FAANG components Amazon (AMZN) and Netflix (NFLX) underperformed the market last year. Let's take a look at the fundamentals of these two worst-performing stocks of the group.
The major market indices had a great run last year despite concerns over the continued spread of the coronavirus, supply chain disruptions, and the Fed's monetary policy tightening. The S&P 500 made 70 record highs and returned 27% last year. The Dow Jones Industrial Average and the Nasdaq Composite gained 18.7% and 21.4%, respectively, over the same period. As of January 2, 2022, according to the Portfolios Lab report, the FAANG stocks have collectively returned 27.7% over the past year.
The FAANG stocks, having multi-billion-dollar market capitalization, are known for their sound business models, strong earnings, and market dominance. While the group as a whole performed pretty well last year, its members Amazon.com, Inc. (AMZN) and Netflix, Inc. (NFLX) failed to keep pace with the other members.
While AMZN continues to be impacted by the increased tech regulations, NFLX faces intense competition. Let's take a look at the factors that could influence the performance of these giants in 2022.
Amazon.com, Inc. (AMZN)
Famous online retailer AMZN's products portfolio, includes merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. In addition, it provides electronic devices such as Kindle, Fire tablet and Fire TV, Echo, Ring, and it also develops and produces media content which it publishes on its membership only Amazon Prime.
On December 17, 2021, India's antitrust agency suspended AMZN's deal with India's Future Group. The suspension comes as a blow for AMZN as it failed to block the sale of Future's retail assets to the Indian giant, Reliance.
AMZN's net income for the fiscal third quarter ended September 30, 2021, decreased 50.1% year-over-year to $3.15 billion. Its net cash used in operating activities decreased 39% year-over-year to $7.31 billion. Also, its operating expenses increased 17.8% year-over-year to $105.96 billion.
Analysts expect AMZN's EPS for the quarter ended December 31, 2021, to decrease 73.4% year-over-year to $3.75. In 2021, the stock gained just about 5%.
Netflix, Inc. (NFLX)
Famous streaming entertainment service provider NFLX operates subscription-based streaming memberships in more than 190 countries. The company acquires, licenses, and produces content, including original programming.
According to the U.S. Sun report, NFLX was having issues with its platform on December 15, 2021, with content not loading correctly and users having various problems accessing the shows. Outages in its site were also reported in November 2021.
For the fiscal third quarter ended September 30, 2021, NFLX's average revenue per membership for the EMEA segment came in at $11.66 million, compared to an average revenue of $11.65 in the prior quarter. Its cost of revenue increased 8.7% year-over-year to $4.20 billion. Also, its general and administrative expenses increased 18.4% year-over-year to $321.79 million.
For the quarter ended December 31, 2021, NFLX's EPS is expected to decline 31.1% year-over-year to $0.82. The stock has gained about 10% in 2021. However, it has declined 2.1% over the past three months and 7% over the past month.
AMZN shares were trading at $3,343.45 per share on Tuesday afternoon, down $64.64 (-1.90%). Year-to-date, AMZN has gained 0.27%, versus a 0.56% rise in the benchmark S&P 500 index during the same period.
Amazon.com, Inc. (AMZN) and Netflix, Inc. (NFLX) are part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master's degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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