The FAANG stocks have taken a hit this week.
Facebook, Amazon, Apple, Netflix, and Google parent Alphabet are tracking to close the week down by at least 3%, despite a slight rebound on Thursday. These tech and growth stocks have suffered from the sell-off triggered by rising inflation fears.
With Big Tech taking a major hit, two traders weighed in on which of the bunch could see a bigger comeback — and which could be in for more pain ahead.
In an interview with CNBC’s “Trading Nation” on Thursday, TradingAnalysis.com founder Todd Gordon named Apple as the FAANG name best poised for a rebound. Digging into the technicals, Gordon suggests getting into Apple with a stop-loss order that kicks in once the stock breaks below $116. Apple closed Thursday just below $125.
On the bearish side, Gordon named Netflix as the weakest name of the FAANG flock. Looking at its most recent earnings report, he noted that although the streaming service beat earnings estimates, the company missed its guidance of adding 6 million new subscribers in the first quarter.
He added that the company has lost 9% share of streaming in the U.S. in 2020 from 2019. The company is underperforming relative to the S&P and biggest streaming competitor Disney.
“They’re losing market share. They’re picking up competitors. I’m a little concerned with Netflix,” he said.
Boris Schlossberg, managing director FX strategy at BK Asset Management, agrees that Netflix could be in for more downside. Some pain points he referenced include the high costs of producing original content, new competitors, and the slowdown in subscriber growth.
“It doesn’t mean that Netflix ultimately isn’t going to be the greatest, biggest global economic broadcast brand there is,” he said, though he does see high cash burn ahead for the company that could bring about stock price weakness.
“To me, it is the weakest of the bunch, and you definitely want to stay away from it on a relative strength basis,” he said.
Like Gordon, Schlossberg does have one FAANG stock he is bullish on – Alphabet. He says the company’s fundamentals are strong and its ad business has done well as the economy recovers.
“I want to be long Google, short Netflix as the spread in the FAANG story,” he said.
Disclosure: Gordon holds AAPL.
