It seems only appropriate the so-called FAANG stocks report their latest quarterly results just before Halloween. Investors have feasted on these stocks in the market recovery since the pandemic-bottom, and some regulators are licking their chops to challenge their market power.
Facebook, Amazon, Apple, Netflix and Google together make up the FAANG moniker. They are high-tech titans that have fueled the S&P 500 bounce since the spring. And each of them has outperformed the broader index year to date.
All but Netflix are due to report quarterly results on Thursday in the week ahead, and investors hope they don't repeat the shortfalls of Netflix. Yes, it was a good three months for the streaming media provider, but not as good as the company or Wall Street analysts expected. The stock dropped almost 10 percent.
While the profits trends matter for these companies and their shareholders, each faces its own perception problems that threaten to cast shadows over their futures.
Perhaps the most serious is the most recent. The federal government accuses Google of being a monopoly in the search engine business. This is the biggest government anticompetitive challenge to big tech since Microsoft was accused of being a monopoly in the web browser business in the late 1990s. The case will drag on for years and bring an even brighter spotlight to Google's very profitable business practices.
Facebook is at the center of the Section 230 outcry. It's a reference to a 1996 law that exempts social media firms from being responsible for what users post. Critics argue it gives companies like Facebook a free pass for misinformation, disinformation and distortion while selling ads around it.
Earlier this month, after a yearlong investigation, Democrats on a House subcommittee said there was "significant evidence" this quartet "wield their dominance" with the consumers, leading to nothing less than "a weakened democracy." Among the report's recommendations are to make it more difficult for these firms to buy smaller rivals, and to separate business units that chill competition.
The fangs are out.
