SP500 vs. FAANG Shiny Stock Analysis on Quarterly Earnings

Posted on May 11, 2022

The skills the authors demonstrated here can be learned through taking Data Science with Machine Learning bootcamp with NYC Data Science Academy.

shinyThis is my Shiny Dashboard to compare FAANG stocks with S&P500. Using R shiny to visualize the return of investment on each individual FANNG stock for the last decade. Besides, to understand the fluctuation of every single FANNG stock by examining their price after the quarterly earnings report, in terms of beat or miss the expected eps. 

Introduction

The S&P 500 Index or the Standard & Poor's 500 Index is a market-capitalization-weighted index of 500 of the largest publicly-traded companies in the U.S. 

“FAANG stocks” is an acronym used to describe some of the most prominent companies in the tech sector. Originally, the acronym was FANG, for Facebook, Amazon, Netflix, and Alphabet (formerly Google). In 2017, investors started including Apple in the group, turning the acronym into FAANG.

As of 2020, the five FAANG stocks are among the largest companies in the world, with a combined market capitalization of over $4.1 trillion. The large influence over the index means that volatility in the stock price of the FAANG stocks can have a substantial effect on the performance of the S&P 500 in general.

 

 

 

R Shiny App Framework

shiny

The shiny app contains 4 tabs, Introduction, Analysis, Data, and About. Under the Analysis tab, there are 3 sub-tabs, ROI, Correlation, and Earning Report.

Result

The ROI tab shows two time series graphs, one is base on the FAANG stock price, the other is to calculate the true value of each stock whether it has split during the time.

shiny
The graph shows the FAANG stock price during 2010 Q1 to 2020 Q3
shiny
The graph shows the true return on investment for each FAANG stock vs. SP500. Calculated by cumulative multiplying the stock split ratio from 2010 Q1 to 2020 Q3.

As we know the FAANG have a substantial effect on the performance of the S&P 500, we would like to examine the correlation of each FAANG stock to SP500. However, when we just look at the stock price, the correlation heatmap seems off because "AAPL" has a negative relationship to SP500, and "NFLX" is nearly neutral to SP500, which are contradicted the above statement.

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Pairwise correlation heatmap using FAANG stock price

 

Key Takeaways

  • A company's earnings are its after-tax net income, or profits, in a given quarter or fiscal year.
  • Earnings are crucial when assessing a company's profitability and are a major factor in determining a company's stock price.
  • Earnings per share (EPS) is a company's net income (or earnings) divided by the number of common shares outstanding.
  • EPS shows how much a company earns for each share, with a higher EPS indicating the stock has a higher value when compared to others in its industry.
  • Corporations are required to report quarterly results, but EPS tends to get the most attention from investors, particularly when the EPS either beats, matches, or misses what stock analysts had been forecasting
shiny

The table shows the earning information for the FAANG stock from 2010 Q1 to 2020 Q3. It shows the earning date, estimate earning per share(eps), and the actual eps, diff represents the stock price

shiny

Choose the specific stock ticker and the earnings status, "beat" or "miss", the graph will show the stock price fluctuation in percentage driven by the report.

Future Improvement

 

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