You would have to be hiding under a big rock or in a cave if you have not heard of Facebook, Amazon, Netflix and Google – aka as the FANGs.
These companies have dominated many people’s lives in a world that’s continuously connected through social media channels.
One way or another, millions of people have come to rely on these companies to keep in touch with families and friends (through their Facebook page), buy anything online (through Amazon), get streaming movies (via Netflix) and search for anything they need to know about (via Google).
These companies are now more than household names around the globe.
In terms of investment opportunity, FANGs have also delivered healthy results to those who have invested in their stocks over the years. The numbers don’t lie. If you look at the share price movements of these companies, you can see the big rise in value for investors.
For example, Facebook shares were trading at $25.73 in 2013 and it is trading at $193 this month. If you bought some Amazon shares in 2013 at $260, those shares are now trade around $1,665. Shares in Netflix have risen from $23.34 in 2013 to $361 this month. And if you invested in some Google (Alphabet) shares five years ago at $399.94 each, you could be sitting at some healthy results as those shares were trading at $1,153 this month.
While I think there is no way to predict how much higher and faster the share prices of these companies will move in the coming years, it is quite safe to say that the FANGs will continue to grow. These companies are driven by innovation, advanced technology and the desire to be relevant to their clients. And at this stage of their growth, they have many years ahead of them to keep growing.
The BATs
Having seen the impressive growth of the FANGs, it may be worthwhile looking at some of their competitors on the other side of the globe. If America has FANGs, China has what is known as BATs – Baidu, Alibaba and Tencent.
You may not be as familiar with the BATs as you are with FANGs, but that doesn’t mean you can ignore them. Whether you’re a user of technology or consumer of anything online, or an investor, chances are you have dealt with the BATs one way or another.
This is because these companies have global presence and network of companies that are interconnected and are already servicing consumers globally.
Let’s have a look at Baidu. It is a multi-national technology company the specialises in delivering Internet-related products and services. It also has an online advertising platform that can be compared to Facebook. Baidu is also into apps development, downloadable contents and artificial intelligence. The company claims to have about two billion users worldwide.
Baidu share price: $85.02 in 2013 to a high of $262.39 in March 2018
Alibaba is the A in BATs. At first glance, it looks like a direct competitor of Amazon in the online distribution of consumer items. But Alibaba has now expanded into other areas of online distribution including consumer-to-consumer, business-to consumer and business-to-business transactions. At the same time, Alibaba has widened its reach in the media and financial services industry.
So, whether you’re a consumer wanting to buy something online, or a business owner wanting to sell something online, most likely you can do business with Alibaba.
Alibaba share price: $93.89 in Sept 2014 to a high of $200.28 in March 2018
Tencent may not be as familiar as Baidu or Alibaba, but it is way up there and completes the BATs. Tencent is another conglomerate that has built a network of businesses all powered by the internet and advanced technology such as Artificial Intelligence.
Similar to Facebook, Tencent is a big player in the social media space (in China) but it also has massive presence in e-commerce, online mobile games, payment systems, music and smartphones.
Tencent share price: HKD 50.60 in April 2013 to a high of HKD 471.20 in Feb 2018
The BATs are growing and dominating their space in the global market. They are in well-entrenched in social media, online retail, financial services, music and media and other sectors that touch millions of people’s lives.
And like their counterpart in FANGs, I think the BATs are here to stay in the years to come.
As investors, it may be worth looking at the BATs which are – directly or indirectly – giving the FANGs a run for their money.
This article was contributed by Alex Douglas, Managing Director of Monex Securities Australia (AFSL: 363 972).
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