ETFs to Watch as Zoom, Facebook Battle for Video Chat Market Share

Last Friday’s trading session saw social media giant Facebook crash Zoom’s party after the videoconferencing company announced it would join the Nasdaq 100. Zoom shares jumped on the news, but then subsequently fell to end with a 6% loss after Facebook said it would roll out its own video chatting features.

One of the key areas where Facebook may have the upper hand is its reported ability to handle up to 50 users at once during a video chat. Whether that’s enough to pull away users from Zoom is anybody’s guess, but expect the Zoom software engineers to respond in tow.

Per a CNBC report, Zoom “has been on a tear since stay-at-home mandates were implemented to slow the Covid-19 pandemic. Zoom CEO Eric Yuan announced earlier this week that the company’s number of daily users grew 50% in the past month to 300 million from 200 million. The company reported about 10 million daily users in December.”

“Clearly the Zoom platform is providing an incredibly valuable service to our global users during this challenging time,” Yuan said.

For investors looking at ETFs that have exposure to Zoom, they can start with a technology and e-commerce-focused fund like the Kevin O’Leary-sponsored Global Internet Giants ETF (OGIG)—OGIG debuted in the markets in June 2018 and has been offering investors access to a wide variety of both domestic and international stocks.

Another fund to check out is the WisdomTree Cloud Computing Fund (WCLD), which also has Zoom exposure. WCLD seeks to track the price and yield performance of the BVP Nasdaq Emerging Cloud Index, which is designed to track the performance of emerging public companies primarily involved in providing cloud computing software and services to their customers.

ETFs to watch with Facebook exposure include the following:

  • 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.
  • 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.

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