Do Big Tech stocks deserve the hype?
Seemingly unfazed by the economic uncertainty infesting industries far and wide, tech stocks within the Nasdaq have kept the index humming as it continues to reach new heights. The biggest names in tech are driving the Nasdaq’s recovery and subsequent outpacing of the wider stock market, with investors large and small pouring their money into FAANG companies: Facebook, Apple, Amazon, Netflix and Alphabet (or Google). Joined by Microsoft and Tesla, these tech titans have watched their shares continue to climb thanks to products and services that are perfectly suited for a pandemic. Let’s take a look at the biggest names in the tech game and see if they’ve still got room to run.
Netflix’s membership has skyrocketed since the beginning of the pandemic, with Netflix adding 15.8 million new members in the first quarter followed by over 10.1 million new members last quarter – outpacing analyst expectations of 8.26 million in the latter quarter. Regardless, shares fell anyway when investors heard that next quarter Netflix predicts growth will slow down as the shock of quarantine begins to dull, and that free cash flow will drop back into negative territory once production resumes next year. Still, the company has had an outstanding year that has set it up for long-term success, and with a P/E ratio above 80 well below the company’s all-time high of 450, Netflix shares may be reasonably valued (for once).