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Meta Sinks After Dismal Q3 Earnings: ETFs in Focus
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After the closing bell on Oct 27, Facebook’s parent company Meta Platforms (META - Free Report) reported dismal third-quarter 2022 results, wherein it missed revenue and earnings estimates. The social media giant reported its second consecutive quarterly drop in revenues and provided a gloomy forecast given the broader fallout in digital advertisement.
As such, META shares dropped as much as 15% in aftermarket hours to the lowest price not seen in more than 6 years on elevated volume. With this decline, the market value of the company dropped below $300 billion — the first time since February 2016. This has put focus on ETFs — Communication Services Select Sector SPDR Fund (XLC - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Vanguard Communication Services ETF (VOX - Free Report) , iShares Global Comm Services ETF (IXP - Free Report) and Global X Social Media Index ETF (SOCL - Free Report) — with a substantial allocation to this social media giant.
Earnings in Focus
Adjusted earnings per share came in at $1.64, missing the Zacks Consensus Estimate of $1.88 but declining 49% from the year-ago earnings. Revenues dipped 4% year over year to $27.71 billion and came below the estimated $27.17 billion. This marks Meta’s second consecutive year-over-year revenue decline since going public in 2012. The social-media platform continues to struggle with a weak advertising market amid an economic slowdown (see: all the Communication ETFs here).
Meta Platforms’ global daily active users increased 3% year over year to 1.98 billion. Monthly active users grew 2% year over year, each to 2.96 billion. The company stated that about 2.93 billion people use at least one of the Family of services (Facebook, WhatsApp, Instagram or Messenger) every day, on average.
The world’s largest social media platform expects to post another year-over-year revenue drop in the current quarter. It expects revenues in the range of $30-$32.5 billion for the fourth quarter.
ETFs in Focus
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $8.5 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Meta Platforms occupying the top position at 16.6%. About 45.3% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two (read: 5 Sectors & Its Top ETFs to Play Solid Dividend & Buyback Yield).
Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 6.2 million shares. It has a Zacks ETF Rank #3 (Hold).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 118 stocks in its basket, with Meta Platforms occupying the second position at 11.2%.
Fidelity MSCI Communication Services Index ETF has amassed $516.7 million in its asset base and trades in an average daily volume of 94,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 113 stocks in its basket, Meta Platform takes the second spot with an 11.1% share. Interactive media & services is the top sector, accounting for 41.4% of the portfolio, while movies & entertainment, integrated telecommunication services, and cable & satellite round off the next three (read: ETFs to Gain as Alphabet Rises Despite Q2 Earnings Miss).
Vanguard Communication Services ETF has AUM of $2.4 billion and trades in a good volume of 279,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
iShares Global Comm Services ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 74 stocks in its basket, with Meta Platforms taking the third spot at 10.1% share. Interactive media & services dominates the fund’s return at 42.8%, followed by integrated telecommunication services (20.2%).
iShares Global Comm Services ETF has amassed $280.8 million in its asset base while trading at an average daily volume of 148,000 shares. The expense ratio comes in at 0.40%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.
Global X Social Media Index ETF provides investors access to social media companies around the world and has amassed $113.4 million in its asset base. It tracks the Solactive Social Media Total Return Index, holding 43 securities in the basket. Of these firms, Meta Platform takes the second spot, making up for 10.6% of assets.
Global X Social Media Index ETF charges 0.65% in annual fees and sees lower trading volumes of roughly 26,000 shares a day. The fund has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
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Meta Sinks After Dismal Q3 Earnings: ETFs in Focus
After the closing bell on Oct 27, Facebook’s parent company Meta Platforms (META - Free Report) reported dismal third-quarter 2022 results, wherein it missed revenue and earnings estimates. The social media giant reported its second consecutive quarterly drop in revenues and provided a gloomy forecast given the broader fallout in digital advertisement.
As such, META shares dropped as much as 15% in aftermarket hours to the lowest price not seen in more than 6 years on elevated volume. With this decline, the market value of the company dropped below $300 billion — the first time since February 2016. This has put focus on ETFs — Communication Services Select Sector SPDR Fund (XLC - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Vanguard Communication Services ETF (VOX - Free Report) , iShares Global Comm Services ETF (IXP - Free Report) and Global X Social Media Index ETF (SOCL - Free Report) — with a substantial allocation to this social media giant.
Earnings in Focus
Adjusted earnings per share came in at $1.64, missing the Zacks Consensus Estimate of $1.88 but declining 49% from the year-ago earnings. Revenues dipped 4% year over year to $27.71 billion and came below the estimated $27.17 billion. This marks Meta’s second consecutive year-over-year revenue decline since going public in 2012. The social-media platform continues to struggle with a weak advertising market amid an economic slowdown (see: all the Communication ETFs here).
Meta Platforms’ global daily active users increased 3% year over year to 1.98 billion. Monthly active users grew 2% year over year, each to 2.96 billion. The company stated that about 2.93 billion people use at least one of the Family of services (Facebook, WhatsApp, Instagram or Messenger) every day, on average.
The world’s largest social media platform expects to post another year-over-year revenue drop in the current quarter. It expects revenues in the range of $30-$32.5 billion for the fourth quarter.
ETFs in Focus
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $8.5 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Meta Platforms occupying the top position at 16.6%. About 45.3% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two (read: 5 Sectors & Its Top ETFs to Play Solid Dividend & Buyback Yield).
Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 6.2 million shares. It has a Zacks ETF Rank #3 (Hold).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 118 stocks in its basket, with Meta Platforms occupying the second position at 11.2%.
Fidelity MSCI Communication Services Index ETF has amassed $516.7 million in its asset base and trades in an average daily volume of 94,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard Communication Services ETF (VOX - Free Report)
Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 113 stocks in its basket, Meta Platform takes the second spot with an 11.1% share. Interactive media & services is the top sector, accounting for 41.4% of the portfolio, while movies & entertainment, integrated telecommunication services, and cable & satellite round off the next three (read: ETFs to Gain as Alphabet Rises Despite Q2 Earnings Miss).
Vanguard Communication Services ETF has AUM of $2.4 billion and trades in a good volume of 279,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
iShares Global Comm Services ETF (IXP - Free Report)
iShares Global Comm Services ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 74 stocks in its basket, with Meta Platforms taking the third spot at 10.1% share. Interactive media & services dominates the fund’s return at 42.8%, followed by integrated telecommunication services (20.2%).
iShares Global Comm Services ETF has amassed $280.8 million in its asset base while trading at an average daily volume of 148,000 shares. The expense ratio comes in at 0.40%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.
Global X Social Media Index ETF (SOCL - Free Report)
Global X Social Media Index ETF provides investors access to social media companies around the world and has amassed $113.4 million in its asset base. It tracks the Solactive Social Media Total Return Index, holding 43 securities in the basket. Of these firms, Meta Platform takes the second spot, making up for 10.6% of assets.
Global X Social Media Index ETF charges 0.65% in annual fees and sees lower trading volumes of roughly 26,000 shares a day. The fund has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.