Amazon in Good Position to Outperform Benchmark S&P 500 Index
First we had the FAANGs – Facebook, Apple, Amazon, Netflix, and Google. With Facebook and Netflix out of favor and Microsoft returning to good graces, we now have MAGA. Not the MAGA promoted by President Trump, but Microsoft, Apple, Google, Amazon.
Amid the broader stock market sell-off, these four tech giants aren’t doing so well, having erased $1.3 trillion in value since their February all-time closing highs.
During the current stock market rout, Microsoft has taken the biggest hit, down $405.2 billion. Apple has lost around $371.8, billion, while Alphabet (Google’s Parent) is down $311.1 billion. Amazon has dropped $239.4 billion.
Of the four tech titans, only Apple and Microsoft remain valued at over $1 trillion.
While the benchmark S&P 500 Index and blue chip Dow Jones Industrial Average have fallen more than 20% from their record highs, thereby entering a bear market, these four stocks have also made similar moves. Amazon, the best performer in the bunch, is down 20.8%. Apple is off its high by 25.4%, while Microsoft has plunged 26.9%. Alphabet (Google) is the worst performer, plummeting 29.3%.
Microsoft hasn’t been in the news lately, probably because it doesn’t own any stores. However, it was one of the first companies to warn about the coronavirus’ impact on its bottom-line. Three weeks ago Microsoft said it doesn’t expect the quarterly revenue guidance it previously provided for the segment that includes Windows.
Even before Microsoft disclosed trouble, Apple disclosed that it did not expect to reach its own quarterly revenue forecast because of lower iPhone supply globally and lower Chinese demand as a result of the coronavirus outbreak. On March 14, Apple said it was closing all stores outside of China until March 27 to reduce the spread of the virus.
Amazon warned it’s experiencing Prime delivery delays and running out of stock of popular household items amid the coronavirus outbreak.
The issues are a result of a “dramatic increase in the rate that people re shopping online,” Amazon said in a blog post that was updated Saturday. Some popular brands and items in the “household staples” categories were out of stock, while Amazon said some of its “delivery promises are longer than usual.” The issue markets a rare disruption to Amazon’s signature two-day and one-day Prime delivery service.
Alphabet’s Verily coronavirus site screening website for Silicon Valley residents went live on Sunday evening. By Monday it appeared to be overloaded and cannot currently offer appointments for screening, according to the website. The site, build by Google sister-company Verily, is supposed to offer people who live in San Mateo or Santa Clara counties and think they are experiencing COVID-19 symptoms a way to schedule a test.
Near-Term Outlook for MAGA
All four MAGA stocks are highly correlated with the benchmark S&P 500 Index, but given their different business models, it looks as if Amazon should outshine the rest. Consumers are still going to need products and if there are mass quarantines in the United States, these consumers will have to rely on the internet to place their orders.
Google is likely to be the worst performer in the bunch because it relies on small business advertising, which is expected to decline during the coronavirus crisis.