Twitter is finally making its debut on the New York Stock
Exchange under the symbol '
' on Thursday. The offering is the world's largest in the
technology space since
went public in May 2012.
The IPO could definitely be a hot one, as there has been plenty of
interest in the company leading up to the first day of open
trading. Twitter actually raised its price range from $17-$20 to
$23-$25 just three days prior to its listing.
Being several times oversubscribed at the high range, the fastest
growing social media firm closed its IPO yesterday, which is one
day before its scheduled closure. A final price could even go above
the high end.
Still, as per the
, Twitter at the high end of the range would be valued at 11.8
times projected sales for 2014 compared to 11.5 times sales for FB,
so it is definitely in line with its most-comparable predecessor.
ETFs to Watch
The U.S. IPO market has been gaining immense popularity and is
enjoying a huge rally this year, as investors clamor for new stocks
with high growth potential. In fact, October was the
since 2007, as 33 companies completed their IPOs, raising more than
$12 billion (read:
Profit from the Booming IPO Market with This
This led to a total of 190 IPOs in the first ten months of the
year, compared to 132 in the year-ago period. These companies
together raised $49.2 billion, higher than $45 billion in the same
period last year.
This month would also be eventful, with two companies already
completing their listing, one awaiting completion on Thursday
dozens of IPOs
scheduled in the days to come.
Though the following ETFs do not have holdings in Twitter yet, and
none are expected to buy on the first day, any of these could be
worthwhile for investors seeking to take advantage of the listing.
These funds are seeing busy trading and will continue to do so in
the weeks ahead, and especially as they add Twitter to their
First Trust US IPO Index Fund (
This ETF provides exposure to the booming U.S. IPO market by
tracking the IPOX-100 U.S. Index. The fund has accumulated $240.5
million in AUM and charges 60 bps in fees a year. Volume is
moderate as it exchanges more than 63,000 shares in hand on
In total, the fund holds 100 securities in its basket with the
largest allocation going to Facebook, AbbVie and General Motors
Company that collectively make up for 26.24% share. Other
securities hold less than 5% share each.
The ETF focuses on the 100 largest and most liquid, and generally
adds stocks at its quarterly rebalancing date. However, if a firm
is bought out or falls off that is already in the index, a new one
to replace it can come in sooner.
Investors should also note that the float must be at least 15% of
the total shares in order to be included, and Twitter will likely
hover right around this mark. The index does have some discretion
though, as it can add companies that might not otherwise be
included in order to give a more accurate picture of the IPO
The product has a nice mix of sectors, with the top four being
consumer discretionary, information technology, energy and
healthcare. FPX was flat in the past ten days while up about 35.5%
in the year-to-date time frame (read:
3 Niche ETFs Crushing the Market
Renaissance IPO ETF (
This ETF debuted last month and has already attracted $28.4 million
in its asset base. IPO sees strong volume of nearly 163,000 shares,
ensuring no, or a slight, additional cost beyond the expense ratio
Holding 50 stocks in the basket, the fund follows the Renaissance
IPO Index, which holds the largest and most liquid newly listed
U.S. initial public offerings. New companies look to be included on
a 'fast entry basis' on the fifth day of trading (read:
Track Initial Public Offerings with this New IPO
Currently, the product allocates more to FB at 10.13%, closely
followed by Zoetis (9.57%) and Delphi Automotive (9.48%). From a
sector look, technology stocks make up for one-fourth share while
financials, consumer (services and goods) and healthcare account
for double-digit exposure. The fund lost nearly 1% in the past 10
trading sessions but is flat since inception on October 16
of this year.
Global X Social Media Index ETF (
This ETF offers the only pure play in the social media space. The
fund has so far amassed $95.9 million in its asset base. The ETF
charges 0.65% in fees and expenses and sees moderate volumes of
roughly 97,000 shares a day.
The product tracks the Solactive Social Media Index, holding 28
securities in the basket. Tencent Holdings, Facebook and Sina Corp
occupy the top three positions in the basket with a combined 30%
share. Twitter is expected to be included in SOCL holdings at the
close of the fifth trading session following the IPO (read:
Social Media ETF in Focus As Twitter Plans IPO
In terms of country exposure, U.S. firms take half of the
portfolio, closely followed by China (27%) and Japan (8%). The ETF
is up over 50% year-to-date but down 5.21% in the past 10 trading
sessions. The fund currently has a Zacks ETF Rank of 2 or 'Buy'
rating with a 'High' risk outlook.
The Twitter listing comes at the perfect time when social media
firms are on fire and the U.S. IPO market is booming. The social
media giant, Facebook, recovered from its losses faced during the
troubled IPO times, jumping more than 70% over the past six months.
Shares of LinkedIn (
) jumped over 27% over the past six months and more than quadrupled
from the IPO price of $45. Yelp is also up 325% since its March
2012 IPO (see:
all the Total U.S. Market ETFs here
Further, two new listings - The Container Store Group (TCS) and
Qunar Cayman Islands Limited (QUNR) - rallied in their first day of
trading on Friday. TCS more than doubled while QUNR climbed nearly
133% before closing at 89% higher than the IPO price.
Given the huge success of the new listings and a prosperous IPO
market, investors could consider these ETFs in their portfolio to
make the most of Twitter and the rest of the social media and IPO
space with lower levels of risk.
And for more coverage on the
, make sure to
at 9:40 (Eastern Time) on Thursday morning, where we will be
special live event
. Our two top social media gurus-Brian Bolan and Tracey Ryniec-will
be laser-focused on the IPO, the social media space, and what
investors should take away from this event. Make sure to tune in!
FACEBOOK INC-A (FB): Free Stock Analysis Report
FT-IPOX 100 (FPX): ETF Research Reports
RENAIS-IPO ETF (IPO): ETF Research Reports
GLBL-X SOCL MDA (SOCL): ETF Research Reports
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