Social media names in the U.S. are jumping, but the social media sector exchange traded fund remains subdued after the plunge in Chinese stocks weigh on the overall portfolio.
The Global X Social Media Index ETF (NYSEArca: SOCL) was up 1.4% over the past week and down 4.7% over the past month.
Facebook (NasdaqGS: FB), SOCL’s largest holding at 12.1% of the underlying portfolio, has increased 5.1% over the past week and 8.6% over the past month as traders take aggressive calls in anticipation of a strong earnings report next week.
Investors are fueling long calls, with a price that indicates traders believe earnings results will push FB above $103.2 – FB currently trades at $96.95, Barron’s reports.
Additionally, Google (NasdaqGS: GOOG), which is 6.2% of SOCL’s holdings, has surged 11.1 over the past week and 19.2% over the past month. Google stocks surged to record highs on better-than-expected advertisement revenue in mid-July.
However, other social media names from China were much weaker after the recent sell-off in Chinese equities. For instance, Tencent, which is 10.1% of SOCL’s holdings, dipped 4.1% over the past month.
SINA (NasdaqGS: SINA), which is 4.4% of SOCL, plunged 24.4% over the past month.
The Global X Social Median Index ETF allocates about 51.4% of its portfolio to U.S. stocks, but SOCL also includes a hefty 28.3% tilt toward China.
Chinese-based stocks have all been under pressure on growing concern regarding the country’s market valuation relative to its economic fundamentals. For instance, according to Market Realist, valuations of Chinese technology stocks were trading with an average 220x their reported profits, which made them the most expensive shares compared to similar companies globally.
However, after the selling, with things more settled, some argue that Chinese tech stocks are more attractive.
“The Internet segment in China benefits from cyclical growth as well as secular trends,” Scott Kessler, an analyst at S&P Capital IQ, said on CNBC. “More people are getting online and buying goods and services.”
Global X Social Media Index ETF
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Max Chen contributed to this article.