The social media giant
has made an impressive comeback following its stellar second
quarter results. In fact, FB shares have nearly doubled over the
past three months, suggesting that the worst might be over for the
company that had been seeing weak mobile advertising revenues since
After all, mobile advertising revenues now account for 41% of the
total revenue in the second quarter, up from 30% in the first
3 ETFs in Focus on Facebook's Earnings Beat
). This increasing advertising trend is expected to continue, as
mobile revenue would soon exceed revenues from desktop
advertisements, as per management.
This fast-growing mobile advertising market is boosting investors'
confidence in the company's growth outlook. Additionally, Facebook
recently launched a number of products, such as Twitter-like
hashtags (#), Facebook Home and Instagram's video application to
These offerings have definitely spurred FB's customer base, leading
to a 51% spike in the monthly mobile active users during the second
quarter. The lined-up products such as the Reader and
television-like spot offerings for advertisers (reportedly for $2.5
million a day) can continue to fuel further growth in the months
Moreover, Citigroup has a bullish outlook on the company's growth
and the resulting upgrade of the stock to 'Buy' has spread optimism
across the whole tech sector (read:
3 Biggest ETF Winners from the 3rd Quarter
Facebook currently has a Zacks Rank #2 (Buy), suggesting that it
will continue to outperform in the remainder of the year. Given the
bullish outlook and the impressive run in FB share prices, we have
highlighted three ETFs with heavy exposure to this social
networking giant, any of which could be great ways to play this
booming trend in the space:
Global X Social Media Index ETF (
This fund tracks the Solactive Social Media Index, holding 27
securities in the basket. Of these firms, FB takes the top spot,
making up roughly 13.01% of assets. In terms of country exposure,
U.S. firms take half of the portfolio, closely followed by China
(28%) and Japan (13%).
The fund debuted a year and a half ago in the social media space
and has amassed $66.7 million in its asset base. The ETF charges
0.65% in fees and expenses and sees light volumes on most days.
The ETF is up 49.1% year-to-date and increased 25.3% in the
trailing three-month period. The fund currently has a Zacks ETF
Rank of 3 or 'Hold' rating with 'High' risk outlook (read:
Social Media ETF in Focus As Twitter Plans IPO
PowerShares Nasdaq Internet Portfolio (
This fund provides broad exposure to the Internet industry by
tracking the NASDAQ Internet Index. The ETF holds 81 stocks in its
basket with FB at the top position, accounting for 8.76% of total
3 Internet ETFs Leading the Tech World Higher
In addition to information technology, the product also offers
exposure to consumer discretionary firms (31%). The fund has
accumulated AUM of $179.6 million while charges 60 bps in fees per
year, though volume is light.
PNQI gained 16.3% in the past three months and 43.1% year-to-date.
The fund currently has a Zacks ETF Rank of 3 or 'Hold' rating with
a 'High' risk outlook.
Market Vectors Wide Moat ETF (
This ETF follows the Morningstar Wide Moat Focus Index and provides
equal-weighted exposure to 21 U.S. securities that have a unique
sustainable competitive advantage in their respective industries.
The fund has managed assets worth $372.2 million so far and charges
49 bps in expense ratio. The product trades in good volume of
roughly 100,000 shares per day.
Here again, Facebook is the top firm with 8.41% allocation. From a
sector perspective, information technology takes the largest share
with 32.8%, closely followed by industrials (19.4%) and financials
In terms of performance, the ETF added 6.9% in the trailing three
months and 20.3% so far this year (see:
all the Total Market ETFs here
While it is true that Facebook has generated much more returns than
the ETFs, the exposure to only FB requires above par risk appetite
given its higher volatility (annualized standard deviation is
46.92%). In order to minimize this risk, investors could definitely
look to the three ETFs that have a high correlation to that of FB's
share price (see more in the
From the above table, it can be concluded that SOCL, with
correlation of 0.84, could be a good choice to play FB directly. It
also represents a moderate risk choice for
those seeking a pure play in the social media space to ride
the most of the recent surge in Facebook, while also gaining
exposure to a host of other firms in the sector.
The other two products - PNQI and MOAT - require lower risk
tolerance levels and provide diversified exposure to other sectors.
However, they have both clearly benefited from the jump in Facebook
shares, and could continue to do well if this social giant remains
a strong performer.
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FACEBOOK INC-A (FB): Free Stock Analysis Report
MKT VEC-WIDE MT (MOAT): ETF Research Reports
PWRSH-ND INTRNT (PNQI): ETF Research Reports
GLBL-X SOCL MDA (SOCL): ETF Research Reports
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