Move over FANGs, the BATs are here
There is no question that Facebook, Amazon, Netflix and Google – aka the FANGs – have dominated many people’s lives.
One way or another, millions of people have come to rely on these companies to keep in touch with family and friends (through their Facebook page), buy anything online (through Amazon), watching movies (via Netflix) and searching for information on absolutely anything (via Google).
These companies have deservedly become household names around the globe.
In terms of investment opportunity, the FANGs have delivered healthy returns to those who have invested in their stocks over the years. The numbers don’t lie. If you look at the share price movements of these companies, you can see the big rise in value for investors.
For example, Facebook shares were trading below $US20 in 2012 and hit highs above $US190 in February this year. Also, in 2012, you could have been buying Amazon shares for less than $US200. In March this year they were trading in the $US1600 region.
Over the same time period, shares in Netflix have risen from less than $US8 in 2012 to push to all-time highs above $US335 in April this year. And if you’d had the foresight to buy Google shares in 2012 at less than $US300, you could be sitting on some healthy profits as those shares pushed toward the $US1200 mark earlier this year.
While there is no way to predict how much higher and faster the share prices of these companies will move in the coming years, it is quite safe to say that the FANGs will continue to grow.
These companies are driven by innovation, advanced technology and the desire to be relevant to their clients.
And at this stage of their development, they potentially have many years ahead of them to keep growing.
Having seen the impressive growth of the FANGs, it may be worthwhile looking at some of their competitors on the other side of the globe. If America has FANGs, China has what is known as BATs – Baidu, Alibaba and Tencent.
You may not be as familiar with the BATs as you are with the FANGs, but that doesn’t mean you can ignore them. Whether you’re a user of technology, a consumer of anything online or an investor, chances are that you have already dealt with the BATs in one way or another.
This is because these companies have a global presence and a plethora of business units that are interconnected and already servicing consumers globally.
It is a multi-national technology company that specialises in delivering internet-related products and services. It also has an online advertising platform that can be compared to Facebook. Baidu is also into app development, downloadable content and artificial intelligence. The company claims to have about two billion users worldwide.
Baidu share price: Baidu can be traded on NASDAQ. Symbol BIDU. Since 2013 the stock has risen from less than $US85 to probe the $US270 region in October 2017 and again in March 2018.
At first glance, it looks like a direct competitor of Amazon in the online distribution of consumer items. But Alibaba has now expanded into other areas of online distribution including consumer-to-consumer, business-to consumer and business-to-business transactions. At the same time, Alibaba has widened its reach in the media and financial services industry.
So, whether you’re a consumer wanting to buy something online, or a business owner wanting to sell something online, most likely you can do business with Alibaba.
Alibaba can be traded on the NYSE. Symbol BABA. From less than $US58 in September 2015, the stock climbed to a high of $US206.20 in January 2018.
Tencent may not be as familiar as Baidu or Alibaba, but it completes the BATs and has delivered phenomenal returns to shareholders. Tencent is another conglomerate that has built a network of businesses all powered by the internet and advanced technology such as Artificial Intelligence.
Similar to Facebook, Tencent is a big player in the social media space (in China) but it also has massive presence in e-commerce, online mobile games, payment systems, music and smartphones.
Tencent can be traded in OTC markets in the US or as a listed security on the Hong Kong Stock Exchange, where it trades in lots of 100 shares. Symbol #00700. In the first few months of 2018 the stock traded above $HK475 numerous times having traded at less than $HK100 as recently as May 2014. In 2004, it was trading around $HK0.675
As you can see, the BATs are growing rapidly and dominating their space in the global market. They are well entrenched in social media, online retail, financial services, music, media and other sectors that touch millions of people’s lives.
And like their counterparts in the FANGs, the BATs are likely to remain a major influence for many years to come.
As investors, it may be worth looking at the BATs which are – directly or indirectly – giving the FANGs a run for their money.