Why FANG Stocks Have Become Short Selling Targets
In-depth market analysis is essential for successful stock trading with a long-term perspective. Right now, there is movement happening among the FANG stocks.
Short-sellers are finding FANG stocks extremely attractive, and Reuters reports that they're sinking their teeth into them. As far as the technology sector is concerned, the stock market has been going through a tough time. But it's been a feeding ground for short-sellers.
Short-sellers Gained a Great Deal with the FANG Stocks
Short-sellers had betted on the four big tech leaders' (the FANG stocks) shares falling. This helped them make a great deal of profit, over $4 billion in just the past two weeks and over $1 billion in April's first two trading days, according to the study by S3 Partners, the financial analytics firm. The FANG group consists of the major tech stocks Facebook ($FB), Amazon ($AMZN), Netflix ($NFLX) and Google parent Alphabet ($GOOG, $GOOGL). One of the reasons investors have been shorting these FANG stocks is because of the threat of regulation that has cropped up. This fear has burst the FANG bubble. Short-sellers look to profit when they sell borrowed shares with the hope that they can buy them later when the price gets lower, and thereby benefit from the difference.
Enough Factors to Indicate Prices of FANG Stocks Could Get Lower
The excessive regulatory supervision over the social networks has actually infused a great deal of negativity that has surpassed the positivity brought about by the progress and technological advancements these networks, particularly Facebook, have made. It was recently discovered that Cambridge Analytica, the political consultancy, had ended up possessing around 50 million Facebook users' information. This could have brought about a significant breach of trust for users, which could affect the overall number of users frequenting the social network – not a recipe for success, though Facebook has tasted a lot of it.
And now there's the new data privacy law brought about by the European Union which takes effect from May 25. That again causes a specter of doubt, though founder and chief executive Mark Zuckerberg did indicate that he did not intend to apply the EU law to the social network's functioning beyond Europe.
The Impact of Governmental Regulations
Increased governmental regulation on tech companies brings uncertainty and fear to investors and the markets. The fears aren't unfounded. An example is the antitrust case Microsoft ($MSFT) had to deal with back in 2002. The company did reach a settlement in the long case that lasted 9 years, till 2011. This led to the stock dipping below its 1999 high all the way till 2016. After that, the company's cloud-based services have caused the stock to be up almost 60%.
Till now this year, Netflix shares have risen by close to 48% while Amazon shares have soared by more than 19%. Facebook and Alphabet shares are, however, down year-to-date. These strategies are best carried out by experienced traders. But experience comes from practice, and commission free trading at TradeZero helps you build up the experience to eventually become a pro in stock trading. Get in touch with us at +1 954-944-3885, or email email@example.com.
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