Industry Indicators: FANGs

Industry Indicators: FANGs

Yardeni Research, Inc.

July 8, 2022

Dr. Edward Yardeni

516-972-7683 eyardeni@

Joe Abbott

732-497-5306 jabbott@

Please visit our sites at blog.

thinking outside the box

Table Of Contents Table Of Contents

FANG Performance & Share of S&P 500

1

S&P 500 Ex-FANG Valuation

2

FANG Valuation

3-6

Relative Forward Earnings and Revenues

7

FANG Portfolio Contribution Analysis

8-9

FAANGM Portfolio Contribution Analysis

10

July 8, 2022 / Industry Indicators: FANGs

Yardeni Research, Inc.



FANG Performance & Share of S&P 500

Figure 1.

2200

2200

1900

MARKET CAP: FANG PERFORMANCE RELATIVE TO S&P 500 EX-FANG*

1900

1600

(ratio scale, indexed to 100 on 12/21/2012, when all FANG issues were trading)

1600

1300

1300

1000

1000

FANG (794.8)

700

S&P 500 (256.5)

700

S&P 500 ex-FANG (239.4)

400

400

7/8

100 2013

2014

2015

2016

2017

2018

* FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). Market cap includes both classes of Alphabet. Source: Standard & Poor's and Yardeni Research Inc.

2019

2020

2021

2022

100

2023

2024

Figure 2.

16

16

FANG STOCKS PERCENT SHARE OF S&P 500 MARKET CAP AND

FORWARD EARNINGS & REVENUES

14

(percent)

14

12

Share of S&P 500

12

Capitalization (10.0)

10

Earnings (4.8)

10

Revenues (0.6)

8

8



6

6

6/23

4

4

2

2

0 2013

2014

2015

2016

2017

2018

* FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). Market cap includes both classes of Alphabet. Source: I/B/E/S data by Refinitiv.

2019

2020

2021

2022

2023

0 2024

Page 1 / July 8, 2022 / Industry Indicators: FANGs

Yardeni Research, Inc.



S&P 500 Ex-FANG Valuation

Figure 3.

24

24

FORWARD P/E RATIO: S&P 500 and S&P 500 EX-FANG*

22

22

S&P 500 (16.1)

20

S&P 500 ex-FANG (14.9)

20

18

18

16

6/30

16

14

14

12 2.50

2.25

P/E Difference Attributable

2.00

To FANG (0.9)

1.75

1.50

1.25

1.00

.75

.50

.25 2013

2014

2015

2016

2017

2018

2019

* Price divided by consensus forward earnings forecast. FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). Source: I/B/E/S data by Refinitiv.

2020

2021

6/23 2022

12 2.50

2.25

2.00

1.75

1.50

1.25

1.00

.75

.50

.25

2023

2024

Figure 4.

3.0

3.0

FORWARD P/S RATIO: S&P 500 and S&P 500 EX-FANG*

2.8

2.8

2.6

2.6

2.4

2.4

2.2

6/30

2.2

2.0

2.0

1.8

1.8

1.6

S&P 500 (2.14)

1.6

1.4

S&P 500 ex-FANG (2.03)

1.4

1.2

1.2

.25

.25

.20

P/S Difference Attributable To FANG (0.08)

.20

.15

.15

.10

.05

.00 2013

2014

2015

2016

2017

2018

* Price divided by consensus forward sales forecast. FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). Source: I/B/E/S data by Refinitiv.

2019

2020

2021

6/23 2022

.10

.05

.00

2023

2024

Page 2 / July 8, 2022 / Industry Indicators: FANGs

Yardeni Research, Inc.



FANG Valuation

Figure 5.

8200

7200 FANG STOCKS, FORWARD EARNINGS, & VALUATION

6200

FANG Stocks*

5200

06/24/22

4200

Blue Angels Implied Market Cap Index (billion $)**

3200

8200

x70 x60

7200 6200

5200

x50

4200 x40

3200 x30

2200

2200

1200

1200

Latest Forward P/E (34.5)

200 2013

2014

2015

2016

2017

2018

* FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). Market cap includes both classes of Alphabet.

** Implied price index calculated using forward earnings times forward P/Es. Source: I/B/E/S data by Refinitiv.

2019

2020

2021

2022

200

2023

2024

Figure 6.

75

5.5

FANG STOCKS FORWARD VALUATION*

70 5.0

65

4.5 60

55

4.0

50

45

40

Forward P/E** (34.5)

35

Forward P/S*** (3.1)

30 2013

2014

2015

2016

2017

2018

2019

2020

* FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). * Market cap divided by aggregate forward consensus expected operating earnings per share. ** Market cap divided by aggregate forward consensus expected revenue per share.

Source: I/B/E/S data by Refinitiv.

2021

3.5

6/24 3.0

2.5

2022

2.0

2023

2024

Page 3 / July 8, 2022 / Industry Indicators: FANGs

Yardeni Research, Inc.



FANG Valuation

Figure 7.

150

150

FANG STOCKS FORWARD P/E*

P/E capped at 140 due to extreme values.

140

140

Facebook (13.3)

130

Amazon (66.9)

130

Netflix (16.7)

120

Google (Alphabet) (19.5)

120

110

110

100

100

90

90

80

80

70

70

60

60

50

50

40

40

30

30

20

10 2013

2014

2015

2016

2017

2018

2019

2020

2021

6/24 2022

20

10

2023

2024

* Price divided by 12-month forward consensus expected operating earnings per share. Source: I/B/E/S data by Refinitiv.

Figure 8.

16

FANG STOCKS FORWARD P/S*

14

12

16

Facebook (3.4)

14

Amazon (2.1)

Netflix (2.5)

Google (Alphabet) (4.9)

12

10

10

8

8

6

6

4

2

0 2013

2014

2015

2016

2017

2018

* Price divided by 12-month forward consensus expected sales per share. Source: I/B/E/S data by Refinitiv.

2019

2020

2021

4 6/24

2

2022

0

2023

2024

Page 4 / July 8, 2022 / Industry Indicators: FANGs

Yardeni Research, Inc.



FANG Valuation

Figure 9.

905

755 META (FACEBOOK) FORWARD EARNINGS, & VALUATION

605 455

305

905

755

x50

605

x40 455

x30

305 x20

155

155

x10

Latest Forward P/E (13.3)

Price Index: Meta (Facebook) 07/08/22 Blue Angels Implied Price Index**

5 2013

2014

2015

2016

2017

2018

** Implied price index calculated using forward earnings times forward P/Es. Source: Standard & Poor's Corporation and I/B/E/S data by Refinitiv.

2019

2020

2021

2022

5

2023

2024

Figure 10.

601

501 AMAZON FORWARD EARNINGS, & VALUATION

401

Stock Price: Amazon

301

07/08/22

201

Blue Angels Implied Price Index**

101

601 501 401

x150

301

x125

x100

201

x75

x50

101

Latest Forward P/E (61.9)

1 2013

2014

2015

2016

2017

2018

** Implied price index calculated using forward earnings times forward P/Es. Source: Standard & Poor's Corporation and I/B/E/S data by Refinitiv.

2019

2020

2021

2022

1

2023

2024

Page 5 / July 8, 2022 / Industry Indicators: FANGs

Yardeni Research, Inc.



FANG Valuation

Figure 11.

2002

1602 NETFLIX FORWARD EARNINGS, & VALUATION

1202

Price Index: Netflix

802

07/08/22

Blue Angels Implied Price Index**

402

x100 x80 x60

x40

2002 1602 1202 802

402

x20

Latest Forward P/E (16.4)

2 2013

2014

2015

2016

2017

2018

** Implied price index calculated using forward earnings times forward P/Es. Source: Standard & Poor's Corporation and I/B/E/S data by Refinitiv.

2019

2020

2021

2022

2

2023

2024

Figure 12.

4300

4300

3900 ALPHABET (GOOGLE) FORWARD EARNINGS, & VALUATION

3500

Price Index: Alphabet (Google)

x30

3900 3500

3100

07/08/22

x25

3100

2700

Blue Angels Implied Price Index**

2300

07/08/22

2700 x20

2300

1900

x15

1900

1500

1500

1100

1100

700

700

Latest Forward P/E (19.5)

300 2013

Implied P/E declined in early 2017 because options expense was included in consensus earnings going forward.

2014

2015

2016

2017

2018

2019

** Implied price index calculated using forward earnings times forward P/Es. Source: Standard & Poor's Corporation and I/B/E/S data by Refinitiv.

2020

2021

2022

300

2023

2024

Page 6 / July 8, 2022 / Industry Indicators: FANGs

Yardeni Research, Inc.



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