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Simon Kronenfeld – Why Did FAANG Stocks Become the Most Profitable in 2020?

As a premier entrepreneur in Canada, Simon Kronenfeld makes sure to keep a finger on the pulse of business. This leads to in-depth analysis of many situations, such as the FAANG dominance in 2020. In the language of the stock market, FAANG is an acronym representing the five great business giants of the modern landscape: Facebook, Apple, Amazon, Netflix, and Google.

These companies, already size-able in their profits and profile, exploded for even more gains in 2020. What was the cause of their profitability? Identifying that can help you figure out under which circumstances you should invest in the future.

Scope of the Rise

Each and every company in the FAANG group saw significant gains in 2020, and some were truly remarkable. The number of Facebook users rose by 12%. Apple’s revenue rose by 49%. Amazon saw remarkable growth with a 70% increase in revenue. Netflix added more than 10 million users. Alphabet, which is the parent company of Google, rose by 10%.

Each of these companies was already a giant, making double-digit growth across the board truly remarkable. Other industries, including Simon Kronenfeld’s specialty of real estate, also experienced surges, but the FAANG group gets a great deal of extra attention because of its significant profile.

Lockdown Conditions

The early months of 2020 saw a near-universal lockdown across the world. That meant that many people were left at home, unable to access their normal luxuries. With stores limiting traffic, online shopping through giants like Apple and Amazon become more common. Services like Netflix saw an increase in viewership as people binged TV shows rather than going to the movie theaters.

More time inside meant more hours spent on computers. Facebook and Google replaced many face-to-face interactions, especially as both companies refined their video-conferencing platforms.

Reliability Amid Uncertainty

With the world changing rapidly due to the COVID-19 pandemic, people around the globe began to look for things upon which they knew they could rely. This was not a time during which people wanted to experiment with new things; the reliability was prized during a time of world volatility.

Because the FAANG group had a strong reputation for reliability and consistent service, customers gravitated toward those businesses. The fact that many people already had accounts or experience with FAANG also played a significant part.

A Pre-Installed Base

The biggest advantage that the FAANG businesses had over competitors was their already large reach among consumers. This gave them more resources than their competitors, allowing them to offer lower prices and more reliable services across the board. The FAANG businesses already made up 21% of the S&P 500 prior to 2020, so they were household names with vast amounts of resources behind them. Essentially, during the craziness of COVID-19, the rich get richer due to several reasons, but their preexisting dominance is one of the major factors.

This can be seen in Simon Kronenfeld’s approach, as he chooses to dominate in any industry he chooses to enter – think the electronics market and now the real estate market. As Kronenfeld enters into specific niches, he ensures that he does not stop until he is the industry leader, which will contribute to exponential growth and success. 

Ultimately, the existing profitability of FAANG businesses gave them the resources to stand head and shoulders above the rest when disaster struck. Because they already had the resources to do what they needed and the technology to cater to customers who were stuck in their homes, the businesses had marked advantages over their competitors.

While much can be made of the FAANG size and how that allowed them to profit, it is also undeniable that they were well-prepared, and other companies can strive to build upon those lessons in order to thrive during a time of rapid change in the future. Following the lead of successful business people like Simon Kronenfeld allows better analysis of these trends and the opportunity to capitalize upon them in the future.

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