ETFs to Click as Facebook Tops $300 on E-Commerce Bets
Amid a solid rebound in technology stocks, Facebook FB has reached to new milestone after Apple AAPL and Tesla TSLA. The social media giant surpassed $300 per share for the first time by climbing 8.2% in the Aug 26 trading session.
The rally came on the back of new e-commerce bets triggered by the pandemic. Facebook launched Facebook Shop – a new online shopping platform. This new section of its flagship app will allow users to find new businesses and shop for various products. Facebook partnered with Shopify SHOP and other e-commerce companies in May to launch Facebook Shop BigCommerce BIGC also announced its collaboration with Facebook this week to launch a new feature on Instagram that would allow users to purchase products without leaving the popular photo-sharing app (read: ETFs in Focus on Stunning BigCommerce IPO).
While advertising should remain Facebook’s focus, analysts are betting that the recent push into e-commerce will be a significant source of added growth for the social media leader.
Shares of Facebook have been on a tear following its robust second-quarter 2020 results wherein it beat both earnings and revenue estimates. The solid results were driven by stay-at-home trends that propelled the demand for e-commerce. Impressed with the quarterly results, many analysts raised the price target on the stock, spreading strong optimism in the company’s growth prospect. As a result, the stock has gained 32.1% in a month (read: Facebook Q2 Earnings Beat Estimates: ETFs Set to Soar).
Currently, Facebook has a Zacks Rank #2 (Buy) and belongs to a top-ranked Zacks industry (top 41%), suggesting their continued outperformance.
ETFs to Buy
Given this, investors seeking to bet on Facebook could consider ETFs having a double-digit allocation to the networking giant. We have highlighted six of them in detail below:
Communication Services Select Sector SPDR XLC
This ETF offers exposure to the communication services sector of the S&P 500 Index and has accumulated $10.7 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Facebook occupying the top position at 23.5%. About 49.6% of the portfolio is allocated to interactive media & services, while entertainment, media, and diversified telecommunication services round off the next three. The product charges 13 bps in annual fees and trades in average daily volume of 2.9 million shares. It sports a Zacks ETF Rank #1 (Strong Buy).
Fidelity MSCI Communication Services Index ETF FCOM
This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 100 stocks in its basket with Facebook occupying the top position at 18.1%. Interactive media & services takes the top spot at nearly 47%, while media, entertainment, and diversified telecommunication services round off the next three positions. The product has amassed $569.9 million in its asset base and trades in average daily volume of 147,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
Vanguard Communication Services ETF VOX
This fund also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 114 stocks in its basket, Facebook takes the second spot with 17.4% share. Interactive media & services is the top sector, accounting for 47% of the portfolio, while movies & entertainment, cable & satellite, and integrated telecommunication services, round off the next three. VOX has AUM of $2.8 billion and trades in a good volume of 195,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Will Telecom ETFs Gain Despite Mixed Q2 Earnings?).
iShares Global Comm Services ETF IXP
This ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 69 stocks in its basket with Facebook taking the top spot at 15.9% share. Interactive media & services dominate the fund’s return at 47.8%, while integrated telecommunication services, movies & entertainment, and wireless telecommunication services round off the next three spots. The fund has amassed $310.8 million in its asset base, while trading in average daily volume of 25,000 shares. Expense ratio comes in at 0.46%. IXP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Global X Social Media Index ETF SOCL
This fund provides investors access to social media companies around the world and has amassed $203.7 million in its asset base. It tracks the Solactive Social Media Total Return Index, holding 40 securities in the basket. Of these firms, Facebook takes the top spot, making up for 10.2% of assets. The ETF charges 0.65% in annual fees and sees moderate trading volumes of roughly 45,000 shares a day. The fund has a Zacks ETF Rank #3 with a High risk outlook.
MicroSectors FANG+ ETN FNGS
This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Facebook’s share coming in at 10%. The product has accumulated $56.6 million in its asset base and charges 58 bps in annual fees. It trades in a meager volume of 16,000 shares a day, on average.
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Apple Inc. (AAPL): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
Facebook, Inc. (FB): Free Stock Analysis Report
Shopify Inc. (SHOP): Free Stock Analysis Report
Vanguard Communication Services ETF (VOX): ETF Research Reports
Fidelity MSCI Communication Services Index ETF (FCOM): ETF Research Reports
Global X Social Media ETF (SOCL): ETF Research Reports
iShares Global Comm Services ETF (IXP): ETF Research Reports
Communication Services Select Sector SPDR ETF (XLC): ETF Research Reports
MICRSFANG (FNGS): ETF Research Reports
BigCommerce Holdings, Inc. (BIGC): Get Free Report
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