Global X Social Media ETF Rallies On Analyst Enthusiasm For FB Shops

Shares of Facebook surged to an all-time high of $230.75 on Wednesday, climbing as much as 6.4%, with Wall Street analysts’ ebullience over the company’s decision to concentrate on e-commerce.

Facebook announced Facebook Shops on Tuesday, which will facilitate easier listing of products on Facebook and Instagram.

The e-commerce push by the social media giant is a way for businesses to set up free storefronts on Facebook and Instagram. The shops, which will be powered by third-party services, including Shopify, BigCommerce, and Woo, are devised to transform the social network into a premier shopping destination.

In a live stream, CEO Mark Zuckerberg championed the storefronts, claiming that broadening e-commerce would be key for bolstering the economy while the pandemic continues. “If you can’t physically open your store or restaurant, you can still take orders online and ship them to people,” he said. “We’re seeing a lot of small businesses that never had online businesses get online for the first time.”

Investors clambered to get on board amid excited analysts’ notes following Facebook’s announcement.
Morgan Stanley noted Wednesday that this could make Facebook a competitor to Amazon and Alphabet’s Google, and that Shops could be a multibillion-dollar opportunity. Meanwhile, Deutsche Bank sees Shops as an opportunity for the company to generate billions.

“We think Facebook Shop in a simplistic bull case could drive up to as much as a $30 [billion]revenue opportunity, across a combination of take-rate driven transactional and advertising revenue,” the analysts wrote.

AB Bernstein said in a note to clients early Wednesday that Facebook Shops go even further, unleashing a $1.3 trillion market.

“We have long viewed FB as the ‘rent’ to the digital economy and a core component of the online retail ecosystem,” the analysts wrote.

Zuckerberg said Shops will heighten the standard web commerce experience by maintaining users’ payment credentials in a single place that they can then utilize on any Facebook or Instagram storefront, a boon for the currently more than 160 million small businesses already using the company’s apps.

Shops can currently be found on businesses’ Facebook pages and Instagram profiles, and can also show up in stories or be promoted in ads.

ETF investors who want to capitalize on social media can use the Global X Social Media ETF (NasdaqGM: SOCL). SOCL seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Social Media Total Return Index. Facebook is one of the ETF’s top holdings, with a more than 11% allocation in the social media giant.

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