After a bearish second half last year, U.S. stocks sharply rebounded to begin the new year. Tech stocks led the strong charge despite ongoing trade war tensions between China and the U.S.
FAANG stocks wrapped up 2018 significantly lower compared to their all-time highs from the summer last year. Despite the overall decline, tech stocks opened the new year stronger, primarily led by Netflix’s (NASDAQ: NFLX) bullish run.
Netflix’s stock price peaked at an all-time high of USD 418.97 per share, which is 23.6% lower going into Tuesday’s opening price. However, Netflix’s shares are now up 17.2% to begin the new year, following its management changeup.
Netflix hired Spencer Neumann as its Chief Financial Officer last week shortly after he was fired from his position at Activision Blizzard, Inc. (NASDAQ: ATVI). Neumann, who has also held senior positions at Walt Disney (NYSE: DIS), will succeed David Wells who has held the position since 2010.
Along with Neumann’s termination, Activision Blizzard’s former Chief Financial Officer Amrita Ahuja also parted ways with the Company. Ahuja joined Square Inc. (NYSE: SQ) as their Chief Financial Officer.
In combination with the management change, analysts have turned bullish for the Company. Piper Jaffray analyst Michael Olson wrote in a note to clients that Netflix could see stronger subscriber growth compared to current expectations. Olson affirmed his overweight rating and provided a price target of USD 430 per share.
Netflix’s FAANG counterparts Amazon.com Inc. (NASDAQ: AMZN), Facebook Inc. (NASDAQ: FB), and Alphabet Inc. (NASDAQ: GOOG) are also seeing stronger starts to the year. Amazon’s shares are now up 10.2% to begin the year, while Facebook is up 7.5% and Alphabet’s Google is up 3.5%.
“People are getting a bit more optimistic. I think investors noticed that the FAANG stocks are solid companies and their valuations came down a lot after the big sell-off,” said Ryan Nauman, Market Strategist at Informa Financial Intelligence, according to CNBC. There’s also “some optimism in trade and the FAANGs have been pretty highly correlated to the developments of trade.”
However, unlike other FAANG stocks, Apple (NASDAQ: AAPL) shares have continued to crater. Apple’s shares plunged after Chief Executive Officer Tim Cook provided a weaker-than-expected guidance.
Cook said that Apple is seeing economic weakness coming from emerging markets, which he said it turned out to have a “significantly greater impact” than projected. Cook continues on to highlight the economic deceleration ongoing in Greater China, which is causing a major impact to Apple’s financials.
Apple’s shares have now fallen by 35.7% since its all-time high back in early October last year.
Despite the trade war tensions, Tesla Inc. (NASDAQ: TSLA) has pushed forward into China and began to establish itself with the construction of its Shanghai factory. Tesla Chief Executive Officer Elon Musk said the plan is to manufacture up to half a million vehicles per year in China. Musk said initially he is aiming to complete initial construction work this summer and then begin to produce Tesla’s Model 3 vehicle by the end of the year.
Investors now seem to be optimistic about trade war talks ongoing between the U.S. and China now as the two continue to work on resolving their disputes. U.S. Commerce Secretary Wilbur Ross told CNBC that the two nations could reach a settlement that “they can live with, and that addresses all the key issues.”
However, investors will continue to focus on the ongoing U.S. government shutdown that began over disagreements on funding for the U.S.-Mexico border wall. U.S. President Donald Trump is expected to address the issue Tuesday night.