FAANG stocks have come under pressure, with the Nasdaq suffering its worst two-day losing streak of the year. However, the chief executive of social media platform company Hootsuite says there is still plenty of opportunity in the tech sector.
The Nasdaq fell on Friday and Monday as investors grew concerned that the FAANG stocks (Facebook, Amazon, Apple, Netflix and Google) were losing momentum and may be overvalued.
However, Hootsuite CEO Ryan Holmes defended the record high valuations being seen in the technology sector.
“There is a lot of value being created by the companies that are disrupting a lot of incumbents,” Holmes told CNBC’s Squawk Box on Tuesday.
“So if you look at what Uber is doing, it’s consolidating the transportation industry and others, and I think that there is a lot of froth around this, but also I think there is a ton of opportunity and if you look at the long game I think they are going to pay out very well.”
One reason the FAANG stocks can justify their valuations is they are continuing to deliver growth. Holmes used the example of how spending on internet advertising is surpassing television advertising, and this trend benefits key players such as Google and Facebook.
Holmes also highlighted a key trend of the increased importance of social media to businesses.
“Social is going from a couple of millennials managing social to a major focus within the business. We’re seeing companies that are shifting all of their advertising to online and to social and that is a huge change in how brands are operating.”
As well as being used for advertising by brands, consumers are using social to find out about products and to request customer support.
“Nobody’s calling a 1 800 number and sitting on hold anymore,” Holmes said.