These are not the go-go days of 2013, at least not yet, when the Global X Social Media Index ETF (NasdaqGM: SOCL) surged 64%, but the social media exchange traded is clawing its way back to respectability.
After rising almost 0.4% Thursday on volume that was about triple the trailing three-month average, SOCL is up 4.3% over the past month, a performance that is nearly seven times better than the Nasdaq Composite over the same period.
SOCL’s modest rally needs some confirmation from its marquee holdings, including Tencent Holdings (OTC: TCEHY), Facebook (NasdaqGS: FB), LinkedIn (NYSE: LNKD) and Twitter (NYSE: TWTR). Those stocks combine for nearly 40% of the ETF’s weight. [Social Media ETF may be Ready to Socialize]
As investors familiar with Internet and social media stocks well know, things can change on a dime with these names. Fortunately for SOCL, the recent changes have been for the better.
Fortunately for SOCL, those big-name Internet stocks have recently been driving the ETF higher. Chinese Internet giant Tencent Holdings (OTC: TCEHY) climbed 8% Thursday on almost triple its average daily volume, extending its one-month run to 8.4%.
Twitter is starting to perk up with a gain of 2.3% over the past week while Facebook is up 5% over the same period.
“One of the top components within this index is the Chinese internet giant Tencent Holdings. It may not be a household name, but this is a $160 Billion company that rarely makes headlines, but it does make all-time highs. In fact, this is pretty much all that this stock does. More recently, prices have been consolidating in a nice healthy sideways range since last August. This overhead supply has been very clean and Thursday morning prices broke out it what appears to be a breakaway gap higher,” according to Eagle Bay Capital founder J.C. Parets.
Tencent is SOCL’s second-largest holding behind LinkedIn at a weight of almost 12%.
Investors are displaying a willingness to embrace cyclical, higher beta fare even as the bull market in U.S. stocks ages. That coupled with new highs for the Nasdaq Composite bode well for SOCL’s near-term upside. [Internet ETF Rally Bodes Well for Bulls]
Global X Social Media Index ETF