Just when it looked safe to get involved with the Global X Social Media Index ETF (NasdaqGM: SOCL), earnings season happened. Suffice to say, this week’s batch of social media earnings have been unkind to SOCL, the lone dedicated social media ETF.
SOCL comes into Friday with a one-month gain of 4.2%, but that gain has been cut in half this week amid lackluster results from Twitter (NYSE: TWTR) and Yelp (NYSE: YELP). For example, SOCL fell 2.3% yesterday as Yelp plunged 23.2%. Prior to Twitter’s earnings drama earlier this week, SOCL had surged 17% over the past 90 days. [Twitter Earnings Will Affect These ETFs]
Twitter and Yelp combine for less than 6% of SOCL’s weight, so imagine the impact, likely adverse, LinkedIn (NYSE: LNKD) is going to have on the ETF today. Shares of LinkedIn, SOCL’s second-largest holding with a weight of 11.7%, plunged nearly 21% during Thursday’s after-hours session after the company forecast second-quarter EPS of 28 cents on revenue of $670 million to $675 million. Analysts were expecting 74 cents per share on revenue of $719 million.
If LinkedIn’s after-hours loss stays the same or worsens today, it will join Twitter and Yelp in shedding more than 20% of its market value post-earnings.
Late last month, Google (NasdaqGM: GOOG) disclosed a lower-than-expected earnings for the first quarter. The slightly lowered earnings results were largely attributed to currency risks, so revenue growth was still a healthy 17% year-over-year, excluding the impact of foreign exchange, reports Everett Rosenfeld for CNBC. Google is SOCL’s seventh-largest holding at a weight of 4.5%. [Social Media ETF Leads Again]
Facebook (NasdaqGM: FB) has also been a drag on SOCL this week. Shares of the social media giant are off nearly 5% over the past week, bad news for an ETF that allocates 9.4%.
It is a good thing for SOCL that China’s Tencent (OTC: TCEHY) has not caught the same cold as its American counterparts. Fortunately for SOCL, Tencent, the ETF’s largest holding with a weight of almost 13%, is up 8.4% over the past week.
Global X Social Media Index ETF
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.