The Global X Social Media Index ETF (NasdaqGM:SOCL)-the only
social media strategy offered in an ETF wrapper today-has lost
nearly 8 percent of its value in the past week alone, as investors
grow disillusioned with one of the fund's largest
Facebook's stock price hit another record low Thursday, dropping
more than 4 percent in early trade. It is hovering around the
$20-a-share mark in what is now the third consecutive day
Facebook's stock has plumbed new lows. The company's stock value
has dropped by nearly a third in the past five days alone, and it's
now more than 45 percent below its initial public offering price in
The weakness in Facebook has been pressuring other social media
names such as Linkedin Corp, which was trading some 2 percent lower
early Thursday. Linkedin had until recently been on a rising
trajectory, posting year-to-date gains of more than 48 percent. But
the stock has lost more than 10 percent of value in the past week,
amid growing views investors are ready to turn to it after they're
done trashing Facebook.
By many measures, Facebook is seen as the poster child of the
social media space, which makes its flagging performance that much
more significant for an industry that is probably still in its
infancy. Growing concerns of whether Facebook can maintain
profitability also puts into question the fate of funds like SOCL,
as IndexUniverse's analyst Ana Kostioukova explored in a recent
Other exchange-traded products that hold Facebook and Linkedin
include the Etracs Monthly Next Generation Internet ETN
(NYSEArca:EIPO) and its double-exposure sibling, the Etracs Monthly
2x Leveraged Next Generation Internet ETN (NYSEArca:EIPL), both of
which have also been under significant pressure.
Facebook represents roughly 9 percent of each of the
UBS-sponsored Etracs ETNs and it has a 7 percent allocation to
Global X's SOCL. Linkedin represents 10 percent of the
UBS-sponsored Etracs ETNs and 11 percent of SOCL.
SOCL, which came to market last November amid enthusiasm
surrounding the social media revolution, has mostly been falling
since then. It has already fallen more than 17 percent since its
The one-year-old thinly traded EIPO has also tagged on losses
nearing 10 percent since the beginning of the year, while EIPL's
leveraged exposure has cost it almost twice as much in the same
Facebook's large footprint appears to on the verge of affecting
another ETF, the First Trust Dow Jones Internet Index Fund
(NYSEArca:FDN). The fund's methodology stipulates that an
eligible stock must be public for three months and have an average
closing price of $10 a share in that three-month period. Facebook
will hit that three-month time stamp on Aug. 18.
The Dow Jones Internet Composite Index that underlies the
strategy is reviewed quarterly, and additions and subtractions take
place on the third Friday of March, June, September and December.
That would make mid-September the earliest possible time when
Facebook might enter FDN's portfolio assuming it still meets the
required criteria by then, a First Trust ETF strategist told
FDN, which holds companies such as Google, Amazon and eBay, has
tagged on gains of 6.2 percent year-to-date. However, the $421
million fund has also been under pressure in recent days.
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