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ETF News And Commentary

After being stressed by weak mobile advertising revenues over the last four quarters, the social media giant Facebook (FB - Analyst Report) finally heaved a sigh of relief this earnings season. The company reported stellar second quarter numbers on mobile advertising growth. Earnings per share of 13 cents, not only surpassed our estimate by 4 cents, but also swung back from a year-ago loss of 8 cents.

Revenues climbed 53% year over year to $1.81 billion and strongly surpassed our estimate of $1.61 billion. Notably, mobile advertising revenues accounted for 41% of the total revenue, up from 30% in the first quarter.

Impressed by the mobile advertising business performance, nineteen analysts revised their target prices upward on the stock. This move swept away the negative sentiments on the social networking company and left many feeling bullish on the firm’s future (read: Winning ETF Strategies For the Second Half).

In fact, FB shares soared nearly 25% on Thursday on an elevated volume of ten times more than the normal trading day. This represents the biggest one-day gain in the company’s trading history, and although still 9.6% below the IPO price, there is finally some hope for FB stock in the future.

Moreover, there are several growth opportunities for the company in the years ahead, such as new video ad formats and Instagram monetization. The stock currently has a Zacks Rank #2 (Buy), suggesting that this trend can definitely continue in the near future.

ETF Impact

Many ETFs having heavy exposure to the social media giant were struggling to hold on to gains when Facebook’s share price plummeted (read: 3 Hot Sector ETFs Surging to #1 Ranks).

Facebook’s share had been under pressure prior to this earnings season and plunged more than 30% since its IPO in May 2012. This concern now seems to be easing with FB’s solid second quarter results and the impressive run in its share prices.

Below, we have highlighted three ETFs that are heavily invested in this company and look to be big movers this week and in the next. Investors should closely monitor the movement in these funds and grab any opportunity from a surge in the FB share price (see more in the Zacks ETF Center):

Global X Social Media Index ETF (SOCL - ETF report)

This is a relatively new product in the social media space that had its debut a year and a half ago and has amassed only $10.4 million in its asset base. The ETF charges 0.65% in fees and expenses.

The fund tracks the Solactive Social Media Index, holding 27 securities in the basket. Of those firms, FB takes the fourth spot, making up roughly 8.54% of assets. Following the announcement, the fund added 4.9% on Thursday, pushing year-to-date gains to over 28%.

PowerShares Nasdaq Internet Portfolio (PNQI - ETF report)

This fund follows the NASDAQ Internet Index, giving investors exposure to the broad Internet industry. The fund holds over 80 stocks in its basket with AUM of $85.7 million while charging 60 bps in fees per year (read: The Top Choice in the Tech ETF World?).

Facebook occupies the top position in the basket with 10.06% of assets. PNQI gained 4.74% on the day and is up 31.14% in the year-to-date time frame.

Market Vectors Wide Moat ETF (MOAT - ETF report)

This ETF tracks the Morningstar Wide Moat Focus Index and provides equal-weighted exposure to 21 U.S. securities that have a unique sustainable competitive advantage in their respective industries. The fund has accumulated $268.5 million in AUM and charges 49 bps in fees a year.

Here again, Facebook is the top firm with a 5.35% allocation. However, the equal allocation strategy prevents heavy concentration and suggests higher diversification benefits. From a sector perspective, information technology takes the largest share with 30.4%, closely followed by industrials (20.1%) and financials (14.5%).

In terms of performance, the ETF rose 1.72% on the day and has gained more than 17% year-to-date. 

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