What's in a name: Is FAANG really now MAMAA?
In 2013, FANG (Facebook, Amazon, Netflix, Google) was an acronym coined by Jim Cramer, a CNBC personnel. In 2017, the acronym evolved to FAANG with the addition of Apple Inc, one of the biggest companies at the time. Since then, the FAANG acronym has become famous worldwide referring to the world’s largest tech companies by market value.
Why is FANG no more?
Tech companies boomed during the pandemic and are now getting a reality check. Rising interest rates and concerns about where the global economies are headed have caused the turbulence. Add to that the economic impacts of the Russia-Ukraine war have caused a major shift in the landscape.
As a result, these companies’ shares have been down by double digits. Meta (the parent company of Facebook) is down by 40% while Google is down by 22%.
This made way for a new dominance, the MAMAA.
The new acronym MAMAA
In his show Mad Money, Jim announced a new Acronym which has gained subsequent fame. MAMAA, the weirdly maternal-sounding new acronym, includes Meta, Amazon, Microsoft, Apple, and Alphabet.
It dropped Netflix which only has a market cap of about $300 billion, while each of the above giants has a market cap of at least $900 billion. Jim added Microsoft into his pick this time, as it now has a similar market cap. The new acronym also replaces Google with its parent company Alphabet and Facebook with Meta.
MAMAA currently includes the big five NASDAQ tech companies in terms of market capitalization and a combined value of over $10 trillion. However, people have pointed out that if we're only looking at the market capitalization of tech companies, it makes sense to include NVIDIA too. That is the reason other acronyms have also emerged in the market.
One other acronym being discussed is MANAMANA (Meta, Amazon, Nvidia, Apple, Microsoft, Adobe, Netflix, and Alphabet). MANAMANA includes eight technology businesses with market capitalizations ranging from $300 billion (Netflix) to $2.5 trillion (Microsoft).
These corporations have valued at a total of $10.8 trillion, accounting for 22% of the American S&P 500 stock market index, which is considered to be the gold standard for measuring stock performance.
Why does it matter anyway?
If you are an investor, these acronyms can be really helpful in deciding which companies you should invest in. These companies are a risky bet currently as further corrections are expected.
Tech companies generally experience more rapid growth and decline than other sectors because of their inherent design and cutthroat competition in the market, so these kinds of insights become all the more important.
And since these large-cap tech companies make up a significant part of the S&P 500 their performance influences the overall market. As an investor, you should keep an eye on their movement to get a sense of the broader market.
References
● https://fortune.com/2021/10/29/faang-mamaa-jim-cramer-tech-facebook-meta/
● https://www.fool.com/investing/2021/11/05/faang-is-dead-long-live-manamana/