Size Up Social Commerce with this ARK Internet ETF

Investors looking for the next big thing in consumer trends don’t need to look much further than social commerce and the popular ARK Next Generation Internet ETF (NYSEArca: ARKW), which already sports considerable leverage to the trend.

E-commerce is one of several emerging internet themes addressed in the actively managed ARKW, but social commerce goes even further, intersecting with other web concepts.

“Social commerce uses networking websites such as Facebook, Instagram, and Twitter as vehicles to promote and sell products and services. A social commerce campaign’s success is measured by the degree to which consumers interact with the company’s marketing through retweets, likes, and shares,” according to Investopedia.

ARKW All Time Performance

Twitter (NYSE:TWTR) is ARKW’s third-largest component at a weight of 5.24%. The firm’s rise indicative of a larger industry trend.

“Retail social commerce is already a multibillion dollar industry in the US, having earned $26.97 billion in sales in 2020. That figure will more than double by 2023, when we predict retail social commerce earnings will hit $56.17 billion,” according to eMarketer.

Beyond Twitter, ARKW has other ties to social commerce growth, including Snapchat parent Snap (NYSE: SNAP) and Etsy (NASDAQ: ETSY), among others. That duo combines for 2.63% of the fund’s roster. Adding to the allure of ARKW’s social commerce leverage is the concept’s positive demographic exposure.

“Social commerce is most popular among adult members of Gen Z: More than half of US social media users ages 18 to 24 have made purchases via a social channel,” adds eMarketer. “In the US, millennials are the most likely to use social media networks as important information sources for shopping decisions.”

Additionally, social commerce isn’t a phenomenon confined to the U.S. In fact, the U.S. is somewhat behind other markets when it comes to this theme. ARKW allocates about 17% of its weight to ex-U.S. equities, and, as an actively managed fund, it can increase that exposure as the managers see fit.

“We project social commerce will be a $79.64 billion industry in the US by 2025. While that’s a lofty figure, marketers have a long way to go if they plan on catching up with China’s success,” adds eMarketer.

Another point in ARKW’s favor on the social commerce front is the ETF’s exposure to platform’s like Shopify (NYSE: SHOP) and payments provider Square (NYSE: SQ). Those are two of the ETF’s top eight holdings and combine for about 9% of its weight.

For more on disruptive technologies, visit our Disruptive Technology Channel.

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.