Jim Cramer says his tech group FANG has lost its magic

CNBC’s Jim Cramer on Monday said it was time to acknowledge that his Big Tech FANG group of companies is an acronym for Facebook’s parent company. Platform meta, Amazon, Netflix and parent Google Alphabet which were first conceived by the host of Mad Money, are not infallible market leaders.

“FANG has become useless as a name, an acronym, an amalgam, out of sheer boredom. No one else cares, nor should they.” he said, adding, “The magic is gone. They have to play by the rules.”

Stocks fell on Monday ahead of a potential Federal Reserve rate hike and a busy week of earnings, including reports from Meta, Amazon and Alphabet.

Cramer said one of his main concerns with FANG is that the companies are not transparent, which prevents investors from making informed decisions about their shares. He spoke about his concerns about each company:

• Meta: Investors have no idea how the company is doing due to lack of communication. But the company’s market capitalization of roughly $386 billion, which is less than it should be, is a reason to own shares.
• Amazon: Stocks will rise if the e-commerce giant lays off even more of its workforce after already cutting more than 18,000 jobs. If the company does not take this step, its stock will fall and the company will become unworthy of its $1 trillion market cap.
• Netflix: While the company is the only name in the group doing well, its market cap of roughly $157 billion means it’s too small to matter.
• Alphabet: Google’s parent company is heavily involved in the advertising business, which has been hit hard by the economic slowdown, but it remains unclear what challenges it is likely to face.

Kramer said that An Apple, which has been added to the original acronym to create FAANG in recent years, is a more transparent company with an attractive price-to-earnings ratio. He advised investors holding shares to hold their shares.

He added that his thoughts on FANG do not mean that he believes the shares are not worth owning.

“I’m not saying these companies are unimportant. They are too big to be ignored. I want to say that FANG has exhausted its hospitality,” he said. “You have to decide on their value as businesses, not on the basis of earnings.”

Disclaimer: The Cramer Charitable Foundation owns shares in Meta, Amazon, Alphabet, and Apple.