3 ETFs to Watch After Google Swings and Misses on Q3 Earnings

With third-quarter earnings and the World Series in full swing this time of year, it was tech heavyweight Google up to beat. Unfortunately, it was a swing and a miss on earnings for the search engine company, which puts ETFs with the heaviest weightings of Google on watch.

Q3 earnings results as reported by CNBC:

  • Earnings per share: $10.12 vs. $12.42 per share expected, per Refinitiv consensus estimates.
  • Revenue: $40.5 billion vs. $40.32 billion expected, per Refinitiv consensus estimates.
  • Traffic acquisition costs: $7.49 billion vs. $7.48 billion, according to FactSet.
  • Paid clicks on Google properties from Q3 2018 to Q3 2019: 18%
  • Cost-per-click on Google properties from Q3 2018 to Q3 2019: -2%

Nonetheless, Google’s brass painted a brighter picture of things to come.

“I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud,” said Sundar Pichai, CEO of Google, in a press release.

“We continue to invest thoughtfully in talent and infrastructure to support our growth, particularly in newer areas like Cloud and machine learning,” said CFO Ruth Porat.

Here are the top three ETFs to watch with the heaviest holdings of Google:

  1. Fidelity MSCI Communication Services Index ETF (NYSEArca: FCOM): seeks to provide investment returns that correspond generally to the performance of the MSCI USA IMI Communication Services 25/50 Index. The index represents the performance of the communication services sector in the U.S. equity market. It may or may not hold all of the securities in the MSCI USA IMI Communication Services 25/50 Index.
  2. Communication Services Select Sector SPDR Fund (XLC): seeks to correspond generally to the price and yield performance of publicly traded equity securities of companies in the Communication Services Select Sector Index. The index includes companies that have been identified as Communication Services companies by the GICS®, including securities of companies from the following industries: diversified telecommunication services; wireless telecommunication services; media; entertainment; and interactive media & services.
  3. Vanguard Communication Services Index Fund ETF Shares (VOX): employs an indexing investment approach designed to track the performance of the MSCI US Investable Market Index (IMI)/Communication Services 25/50. The index itself is made up of stocks of large, mid-size, and small U.S. companies within the communication services sector, as classified under the GICS. The Advisor attempts to replicate the target index by seeking to invest all, or substantially all, of its assets in the stocks that make up the index, in order to hold each stock in approximately the same proportion as its weighting in the index.

All three funds have a 12.02% allocation to Google as of Oct. 28

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