FAANG Weekly Update

Source: FAANG

FAANG Weekly Update

The FAANG Weekly Update consists of a comprehensive overview of the top news related to the 5 FAANG companies (Facebook, Amazon, Apple, Netflix, and Google). To subscribe to this weekly report and gain access to other articles exclusive tech company insights, click here.


Facebook Messenger users forced to create account on main site to use chat app

  • Facebook is to start forcing people to sign up for an account even if they only want to use its standalone Messenger app.
  • For years, the company has allowed people to sign up using only their mobile number, keeping their account separate in the chat app.
  • But now Facebook will require anyone who signs up to use Messenger to get a Facebook account first.

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Amazon employees struggle with ‘nerve-racking’ robot co-workers

  • Amazon is increasingly requiring warehouse employees to get used to working with robots. The company now has more than 200,000 robotic vehicles it calls “drives” that are moving goods through its delivery-fulfillment centers around the U.S. That’s double the number it had last year and up from 15,000 units in 2014.
  • Its rivals have taken notice. Many are adding their own robots in a race to speed up productivity and bring down costs. Without these fast-moving pods, robotic arms and other forms of warehouse automation, retailers say they wouldn’t be able to fulfill consumer demand for packages that can land on doorsteps the day after you order them online.
  • But while fears of fully automated warehouses haven’t come to fruition, there are growing concerns that keeping up with the pace of the latest technology is taking a toll on human workers’ health, safety and morale.

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  • One year ago, Loup Ventures founder Gene Munster and his colleagues laid out a set of tech predictions for 2019. His top call: “Apple will be the best performing FAANG stock in 2019.”
  • As we near year-end, Apple stock (ticker: AAPL) has rallied 86% year to date, well ahead of the other FAANGs: Facebook stock (FB) has rallied 59%; Amazon.com stock (AMZN), 24%; Netflix stock (NFLX), 23%; and Alphabet stock (GOOGL) (G as in Google), 30%.
  • Munster’s call on Apple’s big 2019 not only got the stock right — he also correctly called what drove the stock higher: A new focus on services, a better position than rivals on regulatory issues, and investor anticipation of 5G iPhones in 2020 and beyond.
  • Last week, Munster and Loup rolled out a set of predictions for 2020. And it starts with this one: “Apple is our pick for top performing FAANG stock in 2020.” He thinks fair value for Apple stock is in the $350 to $400 range, which implies a potential gain of more than 30%. On Monday, the stock is down about 1% at $286.79.

Munster offers five reasons he thinks the stock will keep rolling in 2020.

1. Easy iPhone Comparisons

He thinks Apple is likely to meet or exceed analyst expectations in three of the four quarters of 2020 based on easy iPhone comparisons — he notes that iPhone sales were down year-over-year in all four quarters of fiscal 2019. He thinks iPhone will account for 20% of Apple’s revenue in fiscal 2020.

2. Wearables

Munster says Apple’s wearables sales will be larger than those for the Mac in 2020, driven by a new version of the AirPod with better battery life and continued growth for Apple Watch. There’s also the launch of a much-anticipated product called Apple Tags, which Munster says will attach to keys, wallets and other things to keep track of their locations. He sees wearables sales up 45% in 2020, driven primarily by AirPods and Apple Watch. “Beyond 2020, Apple Watch has significant room to grow, given that global Apple Watch adoption remains nascent,” he writes. “We expect 20%-30% Apple Watch unit growth for the next five years.” He thinks that by 2025, Apple Watch sales can reach $48 billion, or about 12% of Apple’s overall revenue.

3. New iPhone Models

Munster expects five new iPhone models in 2020, versus three new models in each of the last two years. All eyes are on the expected 5G launches in late 2020.

4. iPhone 5G

Munster made this forecast a year ago, and updates it this time. “5G will be the biggest iPhone upgrade cycle since 2015, which benefited from the first full year of the larger-screen iPhone 6,” he writes. “Long term, we believe the 5G cycle can deliver two years of 10% iPhone revenue growth, compared to our expectation of iPhone revenue essentially flat in calendar 2020. That said, the iPhone 5G cycle will hit full stride in 2022 and 2023. We expect the product’s first full year (2021) to disappoint investors due to lack of 5G coverage from wireless carriers, which will act as a governor on iPhone 5G adoption.”

5. Multiple Expansion

“We expect AAPL’s earnings multiple to increase in 2020,” he writes. “Investors will begin to recognize Apple’s combination of hardware and services as a high-visibility and sticky business. The prevailing investor view is that shares of AAPL should be undervalued relative to peers based on a belief that the company’s risk profile is relatively higher, because 75% of its revenue comes from hardware. Over the past decade, Apple’s results have shown that the combination of hardware, software, and services can deliver earnings, the most important measure of financial strength, that exceed other tech companies with higher multiples. Over the next year, we believe investors will gain confidence in applying a more services-like multiple to AAPL given the hardware business (iPhone and wearables) will deliver revenue visibility similar to traditional services businesses.”

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Netflix says its original shows were the most popular new material on Netflix in 2019

  • Netflix’s original new releases topped all others on its service in 2019, the company announced Monday.
  • The disclosure could bolster Netflix’s approach to investing heavily in original content to keep subscribers amid new competition.
  • Netflix stands to lose both “Friends” and “The Office,” two of the most popular shows on its service, over the next couple years.

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Google Search now lets you add movies and shows to a ‘Watchlist’

  • Your Google Search results may now be a lot more helpful when it comes to keeping track of all the shows and movies you’re keeping an eye on. The tech giant has rolled out a new card for the mobile results page that lets you add TV series and film titles to a “Watchlist” and a “Watched” bookmarks collection, 9to5Google has discovered.
  • If it’s something you can watch on YouTube, the card would include a “Watch now” button with its price and a link that goes straight to its page on the platform. Meanwhile, if it’s something you can catch in the theaters, that option is replaced with a “Get tickets” button that takes you to the Showtimes tab. Also when you put titles to your Watchlist, it gets added to a Collection featuring their cover art, so you can browse through them whenever you’re looking for something to play.
  • 9to5Google says the feature has been rolling out these past few days. We don’t have access to it yet, but social media posts show people have been getting the feature. It seems to be only available on the web via mobile, though, and on the Google app for Android and iOS.

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Casey Botticello

I hope you enjoyed this week’s FAANG updates! Please leave any comments or questions in the response section below. To receive the weekly FAANG newsletter directly to your inbox, click here to subscribe.

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