Post-Twitter IPO: What to Expect From Internet ETFs

Twitter (NYSE: TWTR) is now into its second day as a public company and those investors want a slice of the social media company’s potential upside without the commitment of the stock itself, there are options among ETFs.

As was reported after Thursday’s close (and widely expected), the issuers Renaissance IPO ETF (NYSEArca: IPO) and the Global X Social Media Index ETF (NasdaqGS: SOCL) confirmed Twitter will be added to those ETFs on Nov. 13.[Social Media ETF Confirms Addition of Twitter]

No crystal ball exists with which to predict to how IPO, SOCL and other possible Twitter ETFs, think the First Trust Dow Jones Internet Index Fund (NYSEArca: FDN), First Trust US IPO Index Fund (NYSEArca: FPX) and the PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI) will act now that Twitter is public, but comparing the post-Twitter IPO action to what happened to Internet stocks after Facebook’s May 2012 IPO could be useful. [Internet ETFs: Is The Bubble Back?]

“Interestingly, the action we’ve seen in Internet stocks during the Twitter IPO is similar to what we saw when Facebook (FB) IPOd in May 2012.  On May 17th (FB pricing) and 18th (FB IPO) of last year, the average Internet stock (>$1 billion) declined 4.62%,” said Bespoke Investment Group. “There may be hope for those that are still bullish on the Internet group, however.  As shown below, in the week and month following Facebook’s IPO day, the average Internet stock rallied 2.68% and 3.14%, respectively.”

Here is a look at how FDN, FPX and PNQI, which today have an average weight of 8.4% to Facebook, performed in the six weeks following the Facebook IPO last year.

Chart courtesy: ETF Replay