Investors love the FANG stocks — Facebook, Amazon, Netflix, Google — as proxies for the best of the tech industry. But the knives are out for the BETS stocks.
Peter Macdiarmid / Getty Images
One way to understand what's happening with technology stocks right now is to consider the difference between two groups of companies:
FANG vs. BETS.
FANG is investor slang for Facebook, Amazon, Netflix, and Google — huge tech companies that dominate their industries and look set to own the future. The stock market has tanked so far this year, but the FANG stocks have avoided the worst of the carnage.
On the other side of the equation are the BETS. It's a new acronym that we're coining: Box, Etsy, Twitter, and Square. These companies are smaller, and they're losing money, even if the opportunities ahead of them seem bright. The BETS, and others like them including GoPro and Grubhub, were once treated like the next big thing and all had big buzzy IPOs.
But the BETS have been killed on Wall Street, which is losing much of its appetite for speculative bets on the future.
The demise of the BETS stocks is bad news for startups hoping to raise big money or stage an IPO. Last week, the social app Foursquare had to cut its valuation in half to raise new capital, according to media reports.
So far this year, the S&P 500 index is down 8%, while the tech-heavy NASDAQ is down 11%. Some newly public tech companies — including the BETS — are doing even worse.
Twitter is down 28% since the beginning of 2016.
Twitter stock closed at $16.68 on Tuesday. That's down 36% from its IPO price of $26 and 63% lower than where the shares closed after their first day of trading in 2013.
WSJ / Dow Jones Newswires / Via quotes.wsj.com
Square is down 27% this year.
The payments company was forced to lower is IPO price to lure investors, and has lost more than a quarter of its value this year. It closed its first day of trading last November at $13.07; its $9.50 closing price Tuesday is down 27% from that day.
WSJ / Dow Jones Newswires / Via quotes.wsj.com
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