iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
21,906 Blog Posts

A Valuation Check-Up on the Beloved FANG Stocks

Now that we’re heading into another Great Depression, I thought we’d check in on the valuation metrics for America’s favorite group of stocks: FAANG (FB, AMZN, AAPL, NFLX, GOOGL)

Year to date this basket of stocks is down 18%, with NFLX leading the charge lower -39%. The average loss from their 52 week highs is -24.5%. The total market cap of these 5 stocks are $6.7 trillion, down ~$1.5 trillion or so from the highs — capital destruction largess.

Average revenue TTM growth is +33% and earnings TTM growth stands at an impressive +70%.

The avg price to sales ratio is 6.1x, with the 3yr avg standing at 7.2x. If share prices did nothing for a year, based on current estimates, the future price to sales ratio would be 5.1x — putting this basket, based on its 3yr median multiple, at a 44% discount to proposed price targets.

But what if this year isn’t like the past 3? Let’s compare them to say 2015 multiples, a year that sucked balls during peak Obama “EAT YOUR PEAS” era.

Stock/ 2015 PS

AAPL: 2.2x

AMZN: 2.6x

FB: 17.3x

GOOGL: 6.5x

NFLX: 5.9x

Average 2015 PS was 6.9x, but to be fair FB was still a hyper growth play then. If we X’d out FB — the current PS is 5.75x and 2015’s PS was 4.3x. The FPS for this basket ex’d out FB is 4.9x. In other words, in spite of the calamitous drop — these fucking stocks can barrel another 25% to get down to 2015 price to sales levels. In order for that grim forecast to come to fruition the economy would need to materially change for the worse. If the economy is fine and this is just a stock correction, this basket has +44% upside based on current bull market multiples.

 

Data provided by Stocklabs.

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10 comments

  1. natehois

    The fed will be slackass tomorrow and markets will rocket 3%

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  2. Mr. Cain Thaler

    Commodities RAGING like Hunter Biden hitting on a crack pipe in a den of prostitutes.

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    • Mr. Cain Thaler

      The IMF just came out and predicted inflation peaks in Q1.

      I get the credit impulse argument but why the fuck would you lay your credibility on the tracks like that?

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  3. Orson

    I surmise these stocks “to barrel down another 25%” based on the impending adjustment to monetary policy.

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  4. purdy

    Grim? Going down to 2015 price to sales levels is not end-of-printing-with-impunity level grim.

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  5. purdy

    …thank you for sharing this perspective.

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  6. og

    They really need to replace NFLX with MSFT now. They single-handedly saved tech yesterday.

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  7. dontpanic26

    FATMAN supersedes FAANG

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