Back to top

Image: Bigstock

ETFs Set to Surge on Solid Meta Q4 Results

Read MoreHide Full Article

After the closing bell on Feb 1, Facebook’s parent company Meta Platforms (META - Free Report) reported solid fourth-quarter 2022 results, wherein it outpaced revenue and earnings estimates. Though the social media giant reported its third consecutive quarterly drop in revenues, it provided an upbeat revenue forecast, signaling a rebound in demand for digital ads after months of weak sales.

META shares spiked 20% in aftermarket hours on elevated volume. If the surge holds true when the market opens today, Meta would add about $76 billion to its market value, according to Bloomberg data, largely reversing the $89 billion hit at its third-quarter results amid investor anxiety over its costly metaverse bet.

Investors should buy ETFs having a large allocation to this social media giant to tap the opportune moment. These include 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 MicroSectors FANG+ ETN (FNGS - Free Report) .

Earnings in Focus

Adjusted earnings per share came in at $3.00, topping the Zacks Consensus Estimate of $2.12 but declining from the year-ago earnings of $3.67 per share. Revenues dipped 4% year over year to $32.2 billion and came above the estimated $31.3 billion. This marks Meta’s third consecutive year-over-year revenue decline since going public in 2012. The year-over-year decline came on the back of a downturn in the online advertising market and competition from rivals such as TikTok (see: all the Communication ETFs here).

Meta Platforms’ global daily active users increased 4% year over year to 2.00 billion. Monthly active users grew 2% year over year, each to 2.96 billion. The company stated that about 2.96 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 revenues in the range of $26-$28.5 billion for the first quarter. The Zacks Consensus Estimate is of $27.18 billion.

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 $9.2 billion in its asset base. It follows the Communication Services Select Sector Index and holds 25 stocks in its basket, with Meta Platforms occupying the top position at 16.8% share. About 40.9% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two.

Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 5.6 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 113 stocks in its basket, with Meta Platforms occupying the second position at 10.7% (read: 5 ETFs to Ride On as Nasdaq Clocks Best January in 20 Years).

Fidelity MSCI Communication Services Index ETF has amassed $512.9 million in its asset base and trades in an average daily volume of 127,000 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 a 10.5% share. Interactive media & services is the top sector, accounting for 37% of the portfolio, while movies & entertainment, integrated telecommunication services, and cable & satellite round off the next three.

Vanguard Communication Services ETF has AUM of $2.7 billion and trades in a good volume of 305,000 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 73 stocks in its basket, with Meta Platforms taking the third spot at 9.5% share. Interactive media & services dominates the fund’s return at 42.7%, followed by integrated telecommunication services (20%).

iShares Global Comm Services ETF has amassed $240.1 million in its asset base while trading at an average daily volume of 24,000 shares. The expense ratio comes in at 0.40%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.

MicroSectors FANG+ ETN (FNGS - Free Report)

MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket, with Meta Platform accounting for a 10% share (read: ETFs to Buy on Tesla's Record-Breaking Q4 Results).

MicroSectors FANG+ ETN has accumulated $54 million in its asset base and charges 58 bps in annual fees. It trades in an average daily volume of 27,000 shares and has a Zacks ETF Rank #3.

Published in