Mobile Payments Look to Ascend as FANG Stocks Break

January 2, 2019         By: Steven Anderson

One of the biggest news items of 2018 was the FANG stock, the simple acronym for “Facebook, Apple, Netflix, Google”. In recent days, had begun to lose their collective luster. Investors thus began to wonder where to go after the FANG stocks started to break, and for some, mobile payments proved a useful alternative as tech funds in particular began to consider PayPal and Visa to fill in some of the FANG gaps.

We’ve heard previous assessments about PayPal and Visa thanks to earlier word from our friends at Mizuho and KBW, and with what they had to say in mind, it’s reasonable enough to look more closely at these two firms. Beyond Mizuho and KBW’s assessments, however, there are plenty of other reasons for tech funds to look beyond FANG and at these two mobile payments leaders.

Fund managers point to the fact that Visa and PayPal both offer impressive growth potential, but at a price that’s a lot more accessible, at least for now. Given that Visa and PayPal also held onto more of their previous gains than the FANG stocks did in this recent extreme volatility, that helps prove Visa and PayPal’s resilience in the face of less-than-ideal conditions.

Visa, for example, is down 2.9 percent from what it was three months ago. Not great news, but when stacked against Facebook’s 30 percent loss and Alphabet—Google’s parent company—dropping 13.5 percent of its value, single-digit losses look much better. Throw in steady expansion in online shopping in general, and the end result is great potential ahead.

All of these are valid points, but one point to particularly bear in mind is that most of the FANG stocks were largely speculative in nature. Facebook and Google really don’t make much, and if both disappeared tomorrow, competitors would readily fill in the gaps. Sure, we’d have some serious culture shock at losing them, but we’d likely migrate to substitutes readily enough. Apple is a bit different, and Netflix somewhat so. Losing Visa and PayPal, meanwhile, would be serious blows to a lot of businesses out there, which makes them somewhat more crucial to everyday operations.

Investments in PayPal and Visa could prove valuable going forward, as the FANGs lose their luster and a changing market provides new opportunities.