10/10/17

Facebook, Amazon, Apple, Netflix, and Alphabet have been some of the hottest growth stocks of 2017. Short sellers, however, see the writing on the wall and have been piling into the so-called FAANG stocks in recent weeks, with Netflix leading the pack as the hottest stock among short sellers.

According to the latest numbers from financial analytics firm S3 Partners, short sellers increased their net positions in the five FAANG stocks by $1.93 billion, a 7.6-percent increase, over the six weeks ending on Sept. 28.

The FAANG stocks are still among the most popular long plays on the market. Although short-sellers have made $510 million in gains on Facebook, Amazon, and Apple, they have lost more than half a billion dollars on their positions in Netflix and Alphabet since Aug. 15.

Do you think that the FAANG bears are right and the 2017 growth rally has run its course? Or will shorting the FAANG stocks continue to be a losing bet for the foreseeable future?

From Yahoo News

Comments (6)

10/10/17

Very interesting article and question. I believe that the FAANG stocks have truly run their course and been successful, but are on track to lose their bite. Only time will tell!

10/10/17

I don't think the growth rally has run it's course. I think with all the new technologies being developed, especially AI, Big Data and Machine learning the golden days of FAANG companies are not yet over.

10/10/17

I would not put all the FAANG stocks in a single bucket (i.e. Long-only/Short-only). Netflix, Alphabet and Amazon have continued upside potential given the strength of their products and dominant position relative to competition. I see no imminent headwinds that would precipitate a drop in their stock prices, and I don't consider them good candidates for shorting. Apple and Facebook's competitive position is relatively weaker, and hence are more prone to a momentum reversal trade (triggered by company news that may not meet market expectations or better than expected news from one of their competitors) and would be good candidates for shorting.

10/16/17

That's true. Netflix might be one of the hottest stocks of FAANG at the moment. Its business model of investing in original content will continue to generate subscribers for years to come. Year-over-year subscriber growth has exceeded 20% in each of the past eight quarters, and international subscriber growth has skyrocketed recently. Online access is exploding in places like Asia, Latin America, and Africa, which will only further allow Netflix to continue expanding its international consumer base.

10/18/17

My mantra when it's come to playing overpriced growth stocks (specifically FAANG) has been to never short quality -- if it's indeed true that market pricing is becoming increasingly separated from fundamentals be it due to the rise of quant or passive, then shorting a company like Apple or Facebook is bound to get you burned unless you have extremely high conviction in the short-term.

10/18/17

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