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Solid User Growth of Twitter Masks Sales Miss: ETFs in Focus
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Twitter has been the talk of the town now, with the company announcing on Apr 26 that Tesla’s (TSLA - Free Report) Elon Musk will buy it at $44 billion. Just after two days, Twitter again caught investors’ attention as the short-messaging services company reported its first-quarter 2022 adjusted earnings of 90 cents per share, which increased 462.5% year over year and beat the Zacks Consensus Estimate by 125%.
Twitter said that it reported 229 million Monetizable Daily Active Users (mDAUs) in the quarter, up 15.9% year over year and up from 226.9 million expected, according to StreetAccount, as quoted on CNBC. In the United States, mDAUs were up 6.4% from the prior year’s quarter, at 39.6 million. International mDAUs came in at 189.4 million, up 18.1% from the year-ago quarter.
Revenues increased 16% year over year to $1.20 billion but lagged the Zacks Consensus Estimate by 0.99%. However, upbeat user growth compensated for the revenue miss and shares gained about 1% in the key trading session on Apr 28, reflecting the earnings results.
Advertising revenues increased 23% year over year to $1.11 billion. Subscription and other revenues reached $94 million, down 31% year over year or 5% year over year when excluding MoPub from the year-ago period.
Twitter also said it would not provide a forward-looking guidance and is withdrawing the outlook provided earlier in light of the deal with Elon Musk. With the completion of the transaction, which is expected close in 2022, Twitter will become a privately held company.
Time for Social Media ETFs?
Gutsy investors can use the recent edginess in Twitter shares as a buying point and cautious investors may wait for some time and look for better entry points. Musk is supposed to refurbish the company’s way of doing business, both transparency-wise (of algorithms and processes) and tolerance-wise (of messages).
Investors can hope Twitter to become a second Tesla. After all, Twitter managed to acquire users despite a difficult operating environment. Snap (SNAP - Free Report) , a Twitter-like company, reported last week that its revenue was hurt by macroeconomic trends weighing on advertisers.
If an investor finds it too risky to bet on Twitter now, the ETF route can be taken as the basket approach lowers company-specific concertation risks.
ETFs in Focus
Twitter’s results will likely have a considerable impact on Simplify Volt Pop Culture Disruption ETF . While Twitter takes 12% of the fund, Snap takes 10% of it. So, the fund could be a buy-the-dip option. Global X Social Media ETF (SOCL - Free Report) puts 6% weight in each of Twitter and Snap.
Twitter is also heavy on MicroSectors FANG+ ETN (FNGS - Free Report) with about 13% weight. Invesco Dynamic Media ETF puts an 8.71% focus on Twitter. Other ETFs with Twitter in their portfolio include Invesco S&P 500 Equal Weight Communication Services ETF and Roundhill MEME ETF .
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Solid User Growth of Twitter Masks Sales Miss: ETFs in Focus
Twitter has been the talk of the town now, with the company announcing on Apr 26 that Tesla’s (TSLA - Free Report) Elon Musk will buy it at $44 billion. Just after two days, Twitter again caught investors’ attention as the short-messaging services company reported its first-quarter 2022 adjusted earnings of 90 cents per share, which increased 462.5% year over year and beat the Zacks Consensus Estimate by 125%.
Twitter said that it reported 229 million Monetizable Daily Active Users (mDAUs) in the quarter, up 15.9% year over year and up from 226.9 million expected, according to StreetAccount, as quoted on CNBC. In the United States, mDAUs were up 6.4% from the prior year’s quarter, at 39.6 million. International mDAUs came in at 189.4 million, up 18.1% from the year-ago quarter.
Revenues increased 16% year over year to $1.20 billion but lagged the Zacks Consensus Estimate by 0.99%. However, upbeat user growth compensated for the revenue miss and shares gained about 1% in the key trading session on Apr 28, reflecting the earnings results.
Advertising revenues increased 23% year over year to $1.11 billion. Subscription and other revenues reached $94 million, down 31% year over year or 5% year over year when excluding MoPub from the year-ago period.
Twitter also said it would not provide a forward-looking guidance and is withdrawing the outlook provided earlier in light of the deal with Elon Musk. With the completion of the transaction, which is expected close in 2022, Twitter will become a privately held company.
Time for Social Media ETFs?
Gutsy investors can use the recent edginess in Twitter shares as a buying point and cautious investors may wait for some time and look for better entry points. Musk is supposed to refurbish the company’s way of doing business, both transparency-wise (of algorithms and processes) and tolerance-wise (of messages).
Investors can hope Twitter to become a second Tesla. After all, Twitter managed to acquire users despite a difficult operating environment. Snap (SNAP - Free Report) , a Twitter-like company, reported last week that its revenue was hurt by macroeconomic trends weighing on advertisers.
If an investor finds it too risky to bet on Twitter now, the ETF route can be taken as the basket approach lowers company-specific concertation risks.
ETFs in Focus
Twitter’s results will likely have a considerable impact on Simplify Volt Pop Culture Disruption ETF . While Twitter takes 12% of the fund, Snap takes 10% of it. So, the fund could be a buy-the-dip option. Global X Social Media ETF (SOCL - Free Report) puts 6% weight in each of Twitter and Snap.
Twitter is also heavy on MicroSectors FANG+ ETN (FNGS - Free Report) with about 13% weight. Invesco Dynamic Media ETF puts an 8.71% focus on Twitter. Other ETFs with Twitter in their portfolio include Invesco S&P 500 Equal Weight Communication Services ETF and Roundhill MEME ETF .