Social Media ETF Rises as Twitter Trounces Earnings Expectations

The Global X Social Media ETF (NasdaqGM: SOCL) rose over 2 percent on Tuesday after social media messaging company Twitter trounced Wall Street’s expectations. Shares of Twitter went as high as 10 percent in the early trading session.

Twitter’s earnings results:

  • Earnings per share (EPS): adjusted 37 cents versus 15 cents expected by a Refinitiv survey of analysts
  • Revenue: $787 million vs. $776.1 million expected by a Refinitiv survey
  • Monthly active users (MAUs): 330 million vs. 318 million expected by a FactSet consensus estimate

This quarter marks the final time that Twitter will report the MAU metric, the company announced during its last earnings report. In its place, Twitter started to use the monetizable daily active users (mDAUs) metric during the last quarter, which would track its audience more accurately.

According to the company, mDAUs will include “Twitter users who log in and access Twitter on any given day through or our Twitter applications that are able to show ads,” according to the company.” For the first quarter, Twitter reported 134 million average mDAUs versus 120 million a year earlier, which was 6 percent higher versus the fourth quarter.

“We are taking a more proactive approach to reducing abuse and its effects on Twitter. We are reducing the burden on victims and, where possible, taking action before abuse is reported,” said Twitter CEO Jack Dorsey.

For the second quarter, Twitter forecasting revenue to come in at $770 million to $830 million with analysts expecting $783.9 million to $853.6 million in the Refinitiv survey. The company expects that cash operating expenses will increase by 20 percent year over year in 2019 in order to invest more funds in “health, conversation, revenue product and sales, and platform.”

SOCL seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Social Media Total Return Index. The index tracks the equity performance of the largest and most liquid companies involved in the social media industry, including companies that provide social networking, file sharing, and other web-based media applications.

The fund has about a 10 percent weighting in both Twitter and Facebook to round out its top three holdings with Tencent Holdings in pole position. Facebook is set to report its earnings on Wednesday.

SOCL is up 15.79 percent year-to-date.

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