FANG Stocks: Investigating the Factors Driving the Stock Prices

Kasper Thrane Kofoed-Dam & Giulia Giorgi

Student thesis: Master thesis


The purpose of this paper has been to find macro-economic and accounting factors that impact the stock prices of the FANGs, which represent today’s leading Internet companies. First, a price index and share weights were calculated by applying the share-weighted index method. Subsequently, the macro-economic and accounting factors’ impact on share prices was tested by OLS regression. The analysis found that none of the macro-economic factors (oil price, CPI, M1 and M2) were significant, while both of the accounting factors (market-to-book value and earnings-per-share) were found to be significant although the results for earnings-per-share were unstable. The model developed for the FANG stocks was tested on two other samples containing data for respectively today’s biggest Chinese Internet companies and the biggest Internet companies of the pre-dotcom bubble. The results for the two other samples supported the findings based on the FANG sample. The main finding, which is supported across all samples, is that market-to-book-value has a high impact on Internet stock prices and thus provides a metric that cannot be ignored by both investors and managers. This paper contribute to the existing literature as the impact of macro-economic and accounting factors on the Internet stock prices has not previously been researched. It is the hope of the authors that this paper can lead to future research, which will examine the impact of a broader set of variables on a broader segment of Internet stocks. This could enable research on longer time series and thereby lead to new interesting findings.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
Publication date2018
Number of pages198
SupervisorsBjörn Preuss