When talking about the US stock market, it is hard not to talk about at least one of the MAANG companies. Together these companies account for more than USD 5.52 trillion as of August 31st 2022, which forms a significant portion of the major US indices such as the S&P 500 and NASDAQ. MAANG is an acronym for the world’s five most popular and best tech giants such as Meta, Amazon, Apple, Netflix & Google.
What are MAANG Companies?
Coined by Jim Cramer, a television host of the popular CNBC show Mad Money, MAANG (originally FANG) is an acronym for the biggest tech giants in the world. Back in 2013, when the term was first introduced, there were only four companies on the list: Facebook, Amazon, Netflix, and Google. Apple was added in 2017. In June 2022, it became MAANG when Facecook’s ticker changed to Meta. MAANG stands for Meta (formerly Facebook), Amazon, Apple, Netflix, and Google (Alphabet).
MAANG stocks trade on the S&P 500, one of the biggest index that is trading on the US stock exchanges. They form approximately 1% of the index, which is huge considering how broad the S&P 500 index is.
These are the most popular stocks in the US due to their continuous efforts to innovate and change how consumers use and interact with technology.
MAANG Stocks in 2022
Meta (formerly Facebook) is a popular social media platform headquartered in California, USA. It helps people connect with family and friends, share ideas, grow a business, and make a difference. Also, it owns and operates two of the largest and most widely used social media platforms, Facebook and Instagram, and two messaging apps WhatsApp and Messenger.
It earns revenue by displaying ads for businesses on its social media platforms. Apart from this, it earns revenues from selling its products.
Meta also ventured into gaming equipment by launching virtual reality (VR) headsets. Some of its new products include tabs and external calling devices that use VR and augmented reality (AR) technologies.
It also partnered with EssilorLuxottica, the parent company of Ray-Ban, to launch Ray-Ban stories. Ray-Ban stories are smart glasses that enable users to record and capture videos and photos, listen to music, and answer calls without compromising on style. The company is also developing new technologies that will enable social interactions on the metaverse.
The next company on the list of MAANG stocks is Amazon. What started as an online book-selling company has evolved into a multinational technology giant today. With headquarters in Seattle, it is the world’s largest online retailer, web service provider, and manufacturer of electronic book readers. The company also provides cloud services, runs digital streaming platforms, and offers artificial intelligence (AI) services.
Apart from operating the largest e-commerce website, it also has physical stores and manufactures and sells tablets, home security devices, and voice control cloud devices for entertainment.
As an online retailer, Amazon has a comprehensive delivery and logistics network. Order fulfilment is done at fulfilment centres and last-mile delivery services. The company also plans to invest in logistics and robotic companies to develop its core business.
The most recent entrant into the MAANG stocks, Apple, is the largest smartphone manufacturer in the world. It is best known for its series of smartphones, iPad, iPods, personal computers, laptops, and watches. Being a design-centric company, it likes to build all its parts, both hardware and software. All Apple products have their own software, iOS, which is considered very user-friendly.
Besides selling smart gadgets, Apple makes money from subscriptions, software, and services. It also has an extensive network of stores and after-sales services worldwide. Apple is also known for its marketing and selling techniques. The company has stores that display its products in a favourable light. The keynote address introducing Apple products has become a major media event.
Apple is working continuously on innovating its products and making them more user-friendly for its customers.
Netflix is a subscription-based online streaming service that allows its members to view movies and TV shows on a smart device. Currently, the company is streaming in 30 languages and 190 countries.
Netflix had its humble beginnings in the year 1997 as a DVD rental company. Later, it launched its website to become one of the largest streaming platforms in the world.
Besides offering streaming services, Netflix also produces movies and shows in different languages. The company currently has a membership of more than 221 million. It is currently working on expanding its member base and also cutting its membership fees to make online streaming affordable in many countries.
Alphabet (formerly Google) was originally a search engine company founded in 1998. Over the years, it has diversified into multiple technological spaces, and Google is the company’s flagship subsidiary. Alphabet is one of the largest technological conglomerates that offer a wide range of products and platforms. Its products include search, maps, Gmail, Android, YouTube, chrome, and cloud. Apart from software, it also offers hardware products such as phones, smartwatches, and home products.
Moreover, Alphabet offers advertising services, which constitute a significant portion of its revenue. The company is also heavily invested in artificial intelligence, robotics software, internet access, and drone-based freight through its subsidiaries, such as DeepMind, Intrinsic, Google Fiber, and Wing.
Are MAANG Companies a Good Investment?
The MAANG companies are technological giants with a competitive advantage over their peers. Being market leaders, they dominate their respective industries with respect to market share. Moreover, they have outperformed the S&P 500 over the years, giving good returns to their investors.
Though these stocks have been facing data privacy and regulatory challenges, these companies continue to remain influential in the stock market. It is the products and technologies that these companies develop that are driving their growth. Moreover, with the emergence of new technologies, MAANG companies will continue to be at the forefront of their industries.
You can invest in MAANG stocks directly by buying their shares from the US stock market. Alternatively, you can invest in mutual funds that invest in them. MAANG companies are already a part of many foreign or international mutual funds in India. All you have to do is, select the right fund and invest in it through a systematic investment plan (SIP) or lumpsum investment.
Frequently Asked Questions
MAMATA stocks is an acronym for Microsoft, Apple, Meta, Amazon, Tesla, and Alphabet. The term was coined after Facebook rebranded itself as Meta and several opinions about dropping Netflix from the list.
There are both proponents and opponents who agree and disagree with the statement. Proponents believe that strong fundamentals justify the price of FAANG stocks and are hence not valued. In contrast, many believe that the price of these stocks is high and there won’t be significant long-term gains for the investors.
In 2013, a television host of the popular CNBC show, Mad Money, Jim Cramer, coined the word FANG with four companies. Apple was never on the list of FAANG stocks until 2017. In 2017, Apple was added to the list, and the acronym FANG became FAANG and then MAANG after Facebook rebranded itself as Meta.
Out of the MAANG stocks, only Apple has paid dividends consistently to its shareholders since 2012. None of the other MAANG stocks has paid dividends to its shareholders. The main reason can be that these companies have huge growth plans that need significant cash flows; hence, they use internal cash flows to fund their investments.
MAANG companies are the top companies in the world. They have given significant returns to their shareholders over the years and have a proven history of high earnings growth yearly. Moreover, their products have brought significant changes to our lives, and not using them feels almost impossible. They have also changed the way consumers interact with technology. All these reasons together made MAANG companies popular in India.
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