Facebook, the social media giant with $80 billion in market
capitalization, shot up some 30 percent higher Thursday following
an earnings report that showed a massive jump in profits thanks to
a growing number of active advertisers amid an even larger number
of active users.
The stock price rally was boosting the performance of a number
that own stocks of the company, such as the $10.4 million Global X
Social Media Index ETF (NYSEArca:SOCL), one of the ETFs with the
largest allocation to Facebook, at 8.5 percent of the overall
portfolio. SOCL gained 4.2 percent Thursday, pushing year-to-date
gains to 28.1 percent.
Similarly, the PowerShares Nasdaq Internet Portfolio
(NasdaqGM:PNQI), and the Market Vectors Wide Moat ETF
(NYSEArca:MOAT), each with an exposure to Facebook of about 8
percent and 5.4 percent, respectively, tacked on gains Thursday of
some 4.5 percent, and 1.3 percent, respectively.
Indeed, Facebook's performance impacts various ETFs. Since the
company joined the Nasdaq 100 Index in December 2012, and a pair of
other Nasdaq benchmarks, the firm popped into a roster of
index-based strategies that include even the likes of the massive
$35 billion PowerShares QQQ Trust (NasdaqGM:QQQ), which also traded
marginally higher Thursday.
In its quarterly statement, Facebook reported a 61 percent
increase in advertising revenue year-on-year, which totaled $1.6
billion. What's more, mobile advertising revenues-an area many had
expected Facebook to struggle with due to stiff competition in the
space-made up 41 percent of that total, putting to rest concerns
that Facebook wouldn't make money in mobile ads.
In all, the social media giant reported second-quarter total
revenue of $1.81 billion, far exceeding analyst expectations.
Facebook, which went public on May 18, 2012, saw its share price
tank right off the bat, partly due to a mishandling of the IPO by
Nasdaq, in a case that ended up in a $10 million fine for the
exchange. That difficult start to what many had thought would be a
historic IPO went on to sour further in the following weeks-stocks
of the firm that opened around $45 a share at the IPO went on to
slide to around $26 in the first two weeks of trading, and by early
September, they had hit a closing price of slightly more than $17,
or 62 percent lower than the original IPO price.
It was a clear downtrend that fostered a growing lack of
confidence in the firm's business model and its ability to deliver
results in a relatively new industry.
Now, the company reported some 1.16 billion active monthly users
at the end of the second quarter, up 21 percent from year-ago
Facebook's strong performance stands out among other tech names
such as Google and Apple-firms that have delivered
less-than-stellar quarterly numbers in recent days.
"Facebook is making a lot of money now and starting to deliver
on the promise," Josh Brown, a New York-based investment advisor
and avid blogger, said in a blog commentary today.
"The long-term negative is that I still think the company
becomes AOL as new generations skip it and go right into building
their own networks and sites outside of the walled garden," he
added. "But that's a ways off, and in the meantime, a billion users
is a billion users."
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