Yes, Really: More Good News for Social Media ETF
August 2nd, 2013 at 7:30am by Tom Lydon
The Global X Social Media Index ETF (NasdaqGS: SOCL) gained 11.5% last month, narrowly missing out on being one of July’s 10 best non-leveraged ETFs.
SOCL’s torrid July pace was buoyed by a stellar earnings report from Facebook (NasdaqGM: FB) and subsequent surge in that stock. Shares of Mark Zuckerberg’s company briefly traded above the $38 IPO price multiple times this week. Yandex (NasdaqGM: YNDX), often referred to as the Google (NasdaqGM: GOOG) of Russia, has also contributed to SOCL’s upside. [Big Day for Internet ETFs]
Not that SOCL, which has $10.8 million in assets under management and a 0.65% annual expense ratio, needs it, but more help could be on the way for the fund. After the close of U.S. markets Thursday, LinkedIn (NYSE: LNKD), the social networking site for professionals, reported a second-quarter adjusted profit of 38 cents on revenue of $363.7 million. Analyst were expecting EPS of 31 cents on revenue of $354 million.
The company forecast third-quarter revenue of $367 million to $373 million, though that is below the $384 million analysts are expecting. LinkedIn’s string of double- or triple-digit revenue growth goes back more than four year, according to Investor Business Daily.
The second-quarter report was enough to send shares of LinkedIn up 7.4% to $228.80, a new all-time high, during Thursday’s after-hours session. LinkedIn has nearly risen four-fold since its 2011 IPO. Thursday’s after-hours rally in LinkedIn is significant for SOCL because the ETF allocates 9.3% of its weight to the share, making LinkedIn SOCL’s fourth-largest holding. China’s Tencent Holdings and Facebook are SOCL’s two largest holdings. [Friending The Social Media ETF]
SOCL’s Thursday price action may have given traders a sign that LinkedIn was going to deliver blowout numbers. The ETF gained 2.8%, rising to a new all-time high on roughly 16 times the average daily volume. If there is a near-term risk to SOCL it is valuation. Like it many of its 27 holdings, SOCL sports a high P/E ratio of 30.39, nearly double that of the PowerShares QQQ (NasdaqGS: QQQ).
Global X Social Media Index ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of Facebook, Google and QQQ.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.