Count the Global X Social Media ETF (NasdaqGM: SOCL) among the internet-related investment ideas that are finding its groove amid stay-at-home and shelter-in-place policies.
One of the first ETFs in the thematic arena, SOCL seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Social Media Total Return Index.
Some data points confirm all that staying at home is, perhaps not surprisingly, leading to increased use of social media platforms.
“Over the past several months, people have been spending more time in their homes due to coronavirus stay-at-home regulations,” reports See It Market. “This has led to significantly lower activity in some industries (travel, restaurants) while other spaces are experiencing tailwinds. In 2020, the average time spent by U.S. adults on social media networks is expected to be 82 minutes per day. This is notably higher than in previous years – over 9% year-over-year. Clearly, the coronavirus has had an impact.”
SOCL Seizes Opportunity
Social media platforms such as Facebook, Snap, and Twitter, each of which are among SOCL’s top 10 holdings, don’t charge their users to use their platforms, making monetization essential to their business models.
“Facebook and Instagram users visit each respective platform several times per day. Snapchat lands high on the list as well with 46% of users visiting several times per day. Trailing behind are YouTube and Twitter,” according to See It Market.
Integral the long-term social media thesis are factors including mobile penetration and large companies embracing social networking as an avenue for attracting new customers. Those factors and others are expected to lift average revenue per user (ARPU).
“In a post-pandemic world, it will be interesting to see which platforms are able to retain and engage users, which can then be rolled into a better value proposition for advertisers,” notes See It Market.
Facebook, the largest social media company, recently provided some support to SOCL by announcing plans for forge into the fast-growing e-commerce arena.
Facebook announced Facebook Shops, 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.
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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.