FAANG Stocks Are Getting Knocked Again

Nov 19 2018, 4:08 PMNov 19 2018, 5:47 PMNovember 19 2018, 4:08 PMNovember 19 2018, 5:47 PM

(Bloomberg) -- The biggest stocks in the technology and the Internet sectors resumed their descent Monday after a brief respite late last week, the latest example of heavy volatility hitting the industries as investors continue to fret that the one-time market darlings suddenly face a darker outlook for growth.

The so-called FAANG stocks were among the biggest decliners of the day. Facebook Inc. fell as much as 5.4 percent to the lowest since February 2017, while Netflix Inc. shed 5.2 percent intraday and Amazon.com Inc. was off as much as 4.6 percent.

While many of these names remain strong performers for 2018 -- Netflix is up more than 40 percent year-to-date while Amazon has gained 30 percent -- they have seen pronounced weakness in recent weeks, with selling spurred by some disappointing quarterly results and growth forecasts.

“You need to recalibrate your growth expectations,” said Frank Davis, director of sales and trading at LEK Securities. “Investors had been looking past those issues before -- if you weren’t in these names then you were missing out -- but that pile-on mentality is gone, and the move out is brisk because the sentiment has changed so much.”

“It shouldn’t be a surprise that there’s been a clearing out; there’s so much less consensus on where these names could be going,” Davis said in a phone interview.

Apple Inc., the largest stock in the market, fell as much as 4.1 percent, on track for its sixth decline in the past eight sessions. The Dow component has come under heavy pressure lately, dropping 20 percent from an early October record, on mounting concern for the future iPhone demand. On Monday, the Wall Street Journal reported that Apple recently cut production orders for all three of the iPhone models that were unveiled in September.

Semiconductor stocks also extended their recent weakness. Nvidia Inc. tumbled as much as 8.4 percent, adding to Friday’s 19 percent slump in the aftermath of a weak outlook. The stock has shed almost half its value since early October.

Among other chipmakers, Advanced Micro Devices Inc. fell 6.2 percent intraday while Micron Technology dropped as much as 4.5 percent. Micron was pressured after the Financial Times reported that Chinese authorities would deepen an antitrust probe into Micron and two other chipmakers, claiming “massive evidence” of violations.

Other so-called momentum names seeing sharp moves on Monday included Square Inc., which slid 10 percent, and Salesforce.com Inc., which lost as much as 7.2 percent. Both fell to their lowest levels in several months.

Dropbox Inc. fell as much as 8.4 percent to a record low, Spotify Inc. dropped as much as 5.2 percent, Roku Inc. was down as much as 5.5 percent and Twilio Inc. lost 11 percent.