FANG lifecycle

[tede02]

Anyone else find it interesting to see these mamouth companies, the darlings of the past 10-years, reach the point where public sentiment shifts against them? Just this week, Amazon is in the news as workers protest Prime Day, Google is in the news after Peter Thiel questions the company's involvement with the Chinese government, and Facebook continues to get slammed for privacy and most recently their crypto launch. It's intriguing to watch these companies transition to mature businesses and the challenges associated with it. Will rapid revenue growth continue? Have these companies become the new blue chips? Will they eventually break up? The next decade will surely be quite different from the last. What's your prediction?

[Jurgis]

Meet new IBM/Microsoft/Walmart/Home Depot the same as old IBM/Microsoft/Walmart/Home Depot.

[Ahab]

I think we will see a divergence among FAANG names during the 2020's.

I think Google and Amazon will have the best performance.

I think Apple and Netflix will do ok.

I think Facebook will decline throughout the 2020's. I think privacy concerns and their business not appealing to young people anymore may be catalysts for a large rerate of the stock.

[Castanza]

I think we will see a divergence among FAANG names during the 2020's.

I think Google and Amazon will have the best performance.

I think Apple and Netflix will do ok.

I think Facebook will decline throughout the 2020's. I think privacy concerns and their business not appealing to young people anymore may be catalysts for a large rerate of the stock.

 

I think you're underestimating Facebook and its importance to society. Smoking cigarettes is also unappealing to most smokers. Yet they are addicted and can't quit. The figure always changes, but it's something like 65ish% want to quit but don't. Not a perfect comparison as traditional cigarettes are declining. But Vaping is increasing. But I'm trying to highlight the addictive nature of FB and social media.

[Guest cherzeca]

what is the worst the can happen to FANG? get broken up? nope, I think they are worth more after spinoffs.  worst is that they get regulated in a manner that makes no business sense, in effect converting part of their profits into payments to users for data usage.  how do you value that?

[LongTermView]

their business not appealing to young people anymore may be catalysts for a large rerate of the stock.

 

Instagram seems appealing to young people. Can you please clarify?

[SHDL]

Few companies maintain their greatness forever and no company can grow at a > 20% rate forever (unless the world economy starts growing at a > 20% rate too), so I don’t find any of this surprising.

 

I like Alphabet’s prospects the best, though I have questions as to whether they’re “over earning” from online ad sales at the moment (see the GOOG thread for a discussion).  I have similar feelings about Amazon, though my reservation about them has more to do with how defensible their AWS moat is over the long haul.  But in any case I think these two will adapt quite well to whatever the world throws at them.

 

I have no opinion on Netflix. 

 

Finally, I really dislike Facebook.  Maybe I’ll write something about it on the FB thread at some point. 

[Castanza]

what is the worst the can happen to FANG? get broken up? nope, I think they are worth more after spinoffs.  worst is that they get regulated in a manner that makes no business sense, in effect converting part of their profits into payments to users for data usage.  how do you value that?

 

I think the odds of Goggle, FB or Amazon getting broken up is slim to none. There are plenty of search alternatives out there (DuckDuckGo if you value privacy). When Zuck called out the government and openly asked them to regulate them it came across to me as an impossible challenge. I like Mark Cubans response.

 

https://www.cnbc.com/video/2019/07/12/billionaire-mark-cuban-on-breaking-up-big-tech-facebook-and-more.html

 

[Broeb22]

If you think about how easy it is to communicate changes in your life to your friends through Facebook, it adds a lot of value. What is the alternative? Sending pics and messages in a group text to all 200+ of your closest friends and acquaintances?

 

Friends of mine are traveling in Europe and now they can easily share with all of their friends the things they are seeing and doing, and as someone who hasn't seen them in probably 6 months, it helps keep me connected and it reduces my "cost" of staying connected via phone calls, texts, in-person get togethers. That coin has two sides though. Now we see what everyone else is doing, and how cool the most photograph-worthy moments of their lives are, and it makes some (most?) people sad.

 

I don't think Facebook is any different than the way humans have always communicated and experienced the envy by seeing/hearing about what others are doing. It amplifies that FOMO experience, but unfortunately I believe that is part of the human experience.

 

While I don't that Facebook specifically will always be around, it is hard to imagine a world where everyone has internet access that does not include some kind of utility that humans use to communicate their thoughts and experiences to others.

[Castanza]

If you think about how easy it is to communicate changes in your life to your friends through Facebook, it adds a lot of value. What is the alternative? Sending pics and messages in a group text to all 200+ of your closest friends and acquaintances?

 

Friends of mine are traveling in Europe and now they can easily share with all of their friends the things they are seeing and doing, and as someone who hasn't seen them in probably 6 months, it helps keep me connected and it reduces my "cost" of staying connected via phone calls, texts, in-person get togethers. That coin has two sides though. Now we see what everyone else is doing, and how cool the most photograph-worthy moments of their lives are, and it makes some (most?) people sad.

 

I don't think Facebook is any different than the way humans have always communicated and experienced the envy by seeing/hearing about what others are doing. It amplifies that FOMO experience, but unfortunately I believe that is part of the human experience.

 

While I don't that Facebook specifically will always be around, it is hard to imagine a world where everyone has internet access that does not include some kind of utility that humans use to communicate their thoughts and experiences to others.

 

It's also a historical index of your life events. It has symbolically replaced scrapbooks and baby albums (to an extent) The longer it has been established the harder it will be for people to leave all that behind. I think there is a sense of effort from the user perspective. The idea that you're building something to be able to look back on has value in and of itself. But let's not forget 2.5B active users....that number alone is insane.

[Saluki]

If you think about how easy it is to communicate changes in your life to your friends through Facebook, it adds a lot of value. What is the alternative? Sending pics and messages in a group text to all 200+ of your closest friends and acquaintances?

 

Friends of mine are traveling in Europe and now they can easily share with all of their friends the things they are seeing and doing, and as someone who hasn't seen them in probably 6 months, it helps keep me connected and it reduces my "cost" of staying connected via phone calls, texts, in-person get togethers. That coin has two sides though. Now we see what everyone else is doing, and how cool the most photograph-worthy moments of their lives are, and it makes some (most?) people sad.

 

I don't think Facebook is any different than the way humans have always communicated and experienced the envy by seeing/hearing about what others are doing. It amplifies that FOMO experience, but unfortunately I believe that is part of the human experience.

 

While I don't that Facebook specifically will always be around, it is hard to imagine a world where everyone has internet access that does not include some kind of utility that humans use to communicate their thoughts and experiences to others.

 

It's also a historical index of your life events. It has symbolically replaced scrapbooks and baby albums (to an extent) The longer it has been established the harder it will be for people to leave all that behind. I think there is a sense of effort from the user perspective. The idea that you're building something to be able to look back on has value in and of itself. But let's not forget 2.5B active users....that number alone is insane.

 

They also have not yet monetized WhatsApp.  I didn't get the big deal about it until I went to visit relatives in Patagonia where cell service is spotty (and expensive) and everyone uses WhatsApp.  I think it's the same in many other parts of the world.  I don't see why they couldn't throw ads on there like they do with FB and instagram. 

[Jurgis]

If you think about how easy it is to communicate changes in your life to your friends through Facebook, it adds a lot of value. What is the alternative? Sending pics and messages in a group text to all 200+ of your closest friends and acquaintances?

 

Friends of mine are traveling in Europe and now they can easily share with all of their friends the things they are seeing and doing, and as someone who hasn't seen them in probably 6 months, it helps keep me connected and it reduces my "cost" of staying connected via phone calls, texts, in-person get togethers. That coin has two sides though. Now we see what everyone else is doing, and how cool the most photograph-worthy moments of their lives are, and it makes some (most?) people sad.

 

I don't think Facebook is any different than the way humans have always communicated and experienced the envy by seeing/hearing about what others are doing. It amplifies that FOMO experience, but unfortunately I believe that is part of the human experience.

 

While I don't that Facebook specifically will always be around, it is hard to imagine a world where everyone has internet access that does not include some kind of utility that humans use to communicate their thoughts and experiences to others.

 

It's also a historical index of your life events. It has symbolically replaced scrapbooks and baby albums (to an extent) The longer it has been established the harder it will be for people to leave all that behind. I think there is a sense of effort from the user perspective. The idea that you're building something to be able to look back on has value in and of itself. But let's not forget 2.5B active users....that number alone is insane.

 

They also have not yet monetized WhatsApp.  I didn't get the big deal about it until I went to visit relatives in Patagonia where cell service is spotty (and expensive) and everyone uses WhatsApp.  I think it's the same in many other parts of the world.  I don't see why they couldn't throw ads on there like they do with FB and instagram.

 

Likely because WhatsApp co-founders who sold to Facebook were against ads and WhatsApp retained some independence after acquisition. This is gone now that both co-founders left Facebook. https://en.wikipedia.org/wiki/WhatsApp

 

But FB discussions probably should be moved to FB thread.  8)