Social media stocks have undergone a transformation -- from
Wall Street darlings to highly-scrutinized
An accumulation of users is no longer the driving force behind
the cache of a social media company; rather, it's how they can
monetize those users to create revenue and drive shareholder
Last year the red-hot social media trend peaked with the
initial public offering of messaging service Twitter, Inc. (NYSE:
), which marked a significant turning point in this industry
The frenzied sentiment for new social media stocks has since
been cooled by the appeal of large companies with established
This year, the majority of stocks in the Global X Social Media
) have underperformed the broader market. SOCL has dropped 8.58
percent so far in 2014, while the SPDR S&P 500 ETF (NYSE:
) has gained 7.99 percent.
SOCL tracks 27 global companies engaged in social networking,
file sharing and other web-based applications. The fund currently
has $134 million in total assets and charges an expense ratio of
AltaVista Research Debuts Fixed-Income ETF
While that recent underperformance is concerning, the
breakdown of underlying holdings shows that one social media
network in particular is rising above the rest.
Facebook, Inc. (NASDAQ:
) is the largest holding in SOCL, with 11.92 percent of the total
assets attributed to this stock. So far this year Facebook has
jumped 37.82 percent and now sports a market capitalization of
more than $190 billion.
Facebook also just recently reported a surge in revenue in the
most recent quarter, as a result of a spike in mobile ad sales
for which shareholders have been looking. This growth in revenue
and focus on quality is part of what sets the company apart from
its competitors in the space.
Both LinkedIn (NYSE:
) and Yelp (NYSE:
) are set to report earnings next week, which might have a big
impact on SOCL. This ETF will be one to watch through the
remainder of 2014 as the shakeup in social media continues.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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