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Play These ETFs as Twitter Rises on Q2 Earnings Strength
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Twitter reported second-quarter 2021 adjusted earnings of 20 cents per share that beat the Zacks Consensus Estimate by 185.7%. The company had reported a loss of $1.58 per share in the year-ago quarter. Revenues surged 74% year over year to $1.19 billion and beat the Zacks Consensus Estimate by 12.1%. It was the fastest revenue growth since 2014 amid pandemic revival. Shares surged 3% on Jul 23 on upbeat earnings.
The top-line growth was driven by strength in brand advertising as well as accelerating year-over-year growth in Mobile App Promotion (MAP) revenues. Advertising revenues surged 87% year over year to $1.05 billion. U.S. advertising revenues totaled $562.3 million, up 98% year over year. International ad revenues increased 76% to $491.1 million.
Total ad engagements increased 32%, driven by strong growth in ad impressions due to growing audience and increased demand for ads. Cost per engagement (CPE) increased 42%, primarily driven by the mix shift to lower funnel ad formats and like-for-like price increases across most ad formats.
Average monetizable daily active users (mDAU) grew 11% year over year to 206 million, driven by global conversation around current events and ongoing product improvements. Average U.S. mDAU was 37 million, up 3% from the year-ago quarter. Average international mDAU was 169 million, rising 12% year over year.
Guidance
With respect to guidance, Twitter expects to see third-quarter revenues in the range of $1.22 billion to $1.30 billion. Analysts polled by Refinitiv had expected $1.17 billion in revenue, per CNBC. For all of 2021, Twitter expects headcount and total expenses to grow at least 30% and that revenue will increase faster than expenses.
Time to Go for Twitter-Heavy ETFs?
Given the above upbeat scenario, investors can use the recent gains in Twitter shares via the ETF route too along with the equity route. The ETF route or the basket approach lowers company-specific concertation risks.
ETFs in Focus
Twitter’s results will likely have a considerable impact on Global X Social Media ETF (SOCL - Free Report) . Twitter takes about 6.39% of SOCL, holding the fourth position. As a result, the company’s performance is crucial to the entire social media sector. The product charges 65 bps in annual fees. SOCL has company-specific concentration risk, putting more than 60% investments in its top 10 holdings. At the current level, SOCL carries a Zacks ETF Rank #3 (Hold) with a High-risk outlook.
Another ETF that will be impacted by Twitter’s earnings is MicroSectors FANG+ ETN (FNGS - Free Report) . Twitter takes about 12.89% of the fund. The stock also has 5.92% weight in Invesco Dynamic Media ETF .
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Play These ETFs as Twitter Rises on Q2 Earnings Strength
Twitter reported second-quarter 2021 adjusted earnings of 20 cents per share that beat the Zacks Consensus Estimate by 185.7%. The company had reported a loss of $1.58 per share in the year-ago quarter. Revenues surged 74% year over year to $1.19 billion and beat the Zacks Consensus Estimate by 12.1%. It was the fastest revenue growth since 2014 amid pandemic revival. Shares surged 3% on Jul 23 on upbeat earnings.
The top-line growth was driven by strength in brand advertising as well as accelerating year-over-year growth in Mobile App Promotion (MAP) revenues. Advertising revenues surged 87% year over year to $1.05 billion. U.S. advertising revenues totaled $562.3 million, up 98% year over year. International ad revenues increased 76% to $491.1 million.
Total ad engagements increased 32%, driven by strong growth in ad impressions due to growing audience and increased demand for ads. Cost per engagement (CPE) increased 42%, primarily driven by the mix shift to lower funnel ad formats and like-for-like price increases across most ad formats.
Average monetizable daily active users (mDAU) grew 11% year over year to 206 million, driven by global conversation around current events and ongoing product improvements. Average U.S. mDAU was 37 million, up 3% from the year-ago quarter. Average international mDAU was 169 million, rising 12% year over year.
Guidance
With respect to guidance, Twitter expects to see third-quarter revenues in the range of $1.22 billion to $1.30 billion. Analysts polled by Refinitiv had expected $1.17 billion in revenue, per CNBC. For all of 2021, Twitter expects headcount and total expenses to grow at least 30% and that revenue will increase faster than expenses.
Time to Go for Twitter-Heavy ETFs?
Given the above upbeat scenario, investors can use the recent gains in Twitter shares via the ETF route too along with the equity route. The ETF route or the basket approach lowers company-specific concertation risks.
ETFs in Focus
Twitter’s results will likely have a considerable impact on Global X Social Media ETF (SOCL - Free Report) . Twitter takes about 6.39% of SOCL, holding the fourth position. As a result, the company’s performance is crucial to the entire social media sector. The product charges 65 bps in annual fees. SOCL has company-specific concentration risk, putting more than 60% investments in its top 10 holdings. At the current level, SOCL carries a Zacks ETF Rank #3 (Hold) with a High-risk outlook.
Another ETF that will be impacted by Twitter’s earnings is MicroSectors FANG+ ETN (FNGS - Free Report) . Twitter takes about 12.89% of the fund. The stock also has 5.92% weight in Invesco Dynamic Media ETF .