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Google-parent Alphabet (GOOGL - Free Report) reported mixed fourth-quarter 2019 results, with earnings topping and revenues missing estimates. Due to the mixed results, shares of GOOGL have lost as much as 2.5% since the earnings release on Feb 3, 2020 (read: Microsoft's Azure Returns to Growth: 5 ETFs to Buy).
Earnings at a Glance
Earnings per share were $15.35, beating the Zacks Consensus Estimate of $12.76 and rising 51.7% sequentially and 20.2% year over year. Net revenues, excluding total traffic acquisition cost or TAC (TAC is the portion of revenues shared with Google’s partners, and amount paid to distribution partners and others who direct traffic to the Google website) of $8.50 billion, came in at $37.57 billion, up 13.8% sequentially and 18% year over year. Net revenues missed the Zacks Consensus Estimate by 2.3% due to a slump in search advertising growth and lower-than-expected YouTube sales.
Beginning fourth quarter, Alphabet disaggregated its revenue segments on a more detailed basis, including Search, YouTube ads and Cloud. Advertising revenues grew 16.6% year over year to $37.93 billion and accounted for 82.3% of total revenues.Separately, YouTube grew 30.8% year over year to $4.7 billion, accounting for 10.2% of quarterly revenues. In addition, Google cloud grew 53% year over year to $2.6 billion, accounting for 5.7% of quarterly revenues.
Meanwhile, TAC was up 13.5% sequentially and 14.3% year over year.
ETFs in Focus
The mixed results might have a huge impact on ETFs that are heavily invested in this Internet giant. Below we have highlighted five ETFs with double-digit exposure to Alphabet that could see some losses in today’s trading session (see: all the Technology ETFs here).
This fund targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 114 stocks in its basket, Alphabet takes the top spot with 22.2% share. VOX has AUM of $2.19 billion and charges 10 bps in annual fees. The fund has a Zacks ETF Rank #3 (Hold), with a Medium risk outlook. The fund has gained around 1% since Alphabet’s earnings release (read: Facebook Tumbles Post Q4 Results: What's in Store for ETFs?).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 107 stocks in its basket, with Alphabet occupying the third position at 11.72%. The product has amassed $493.5 million in its asset base and charges 8 bps in annual fees. It has a Zacks ETF Rank #3, with a Medium risk outlook. The fund has gained around 0.8% since the earnings release.
Communication Services Select Sector SPDR Fund (XLC - Free Report)
This ETF tracks the communication services sector of the S&P 500 Index and has accumulated $7.17 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Alphabet Inc. Class A occupying the second position with 12.17% weight. The product charges 13 bps in annual fees. It has a Zacks ETF Rank #2 (Buy). The fund has gained around 1% since the earnings release (read: Oscar or Earnings: What Will Drive Netflix ETFs Ahead?).
This 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 67 stocks in its basket, with GOOGL taking the third spot at 11.1% share. The fund has amassed $236.7 million in its asset base. Expense ratio came in at 0.46%. IXP has a Zacks ETF Rank #3, with a Medium risk outlook. The fund has gained around 0.6% since the earnings release.
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Google ETFs Gain Despite Mixed earnings
Google-parent Alphabet (GOOGL - Free Report) reported mixed fourth-quarter 2019 results, with earnings topping and revenues missing estimates. Due to the mixed results, shares of GOOGL have lost as much as 2.5% since the earnings release on Feb 3, 2020 (read: Microsoft's Azure Returns to Growth: 5 ETFs to Buy).
Earnings at a Glance
Earnings per share were $15.35, beating the Zacks Consensus Estimate of $12.76 and rising 51.7% sequentially and 20.2% year over year. Net revenues, excluding total traffic acquisition cost or TAC (TAC is the portion of revenues shared with Google’s partners, and amount paid to distribution partners and others who direct traffic to the Google website) of $8.50 billion, came in at $37.57 billion, up 13.8% sequentially and 18% year over year. Net revenues missed the Zacks Consensus Estimate by 2.3% due to a slump in search advertising growth and lower-than-expected YouTube sales.
Beginning fourth quarter, Alphabet disaggregated its revenue segments on a more detailed basis, including Search, YouTube ads and Cloud. Advertising revenues grew 16.6% year over year to $37.93 billion and accounted for 82.3% of total revenues.Separately, YouTube grew 30.8% year over year to $4.7 billion, accounting for 10.2% of quarterly revenues. In addition, Google cloud grew 53% year over year to $2.6 billion, accounting for 5.7% of quarterly revenues.
Meanwhile, TAC was up 13.5% sequentially and 14.3% year over year.
ETFs in Focus
The mixed results might have a huge impact on ETFs that are heavily invested in this Internet giant. Below we have highlighted five ETFs with double-digit exposure to Alphabet that could see some losses in today’s trading session (see: all the Technology ETFs here).
Vanguard Communication Services ETF (VOX - Free Report)
This fund targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 114 stocks in its basket, Alphabet takes the top spot with 22.2% share. VOX has AUM of $2.19 billion and charges 10 bps in annual fees. The fund has a Zacks ETF Rank #3 (Hold), with a Medium risk outlook. The fund has gained around 1% since Alphabet’s earnings release (read: Facebook Tumbles Post Q4 Results: What's in Store for ETFs?).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 107 stocks in its basket, with Alphabet occupying the third position at 11.72%. The product has amassed $493.5 million in its asset base and charges 8 bps in annual fees. It has a Zacks ETF Rank #3, with a Medium risk outlook. The fund has gained around 0.8% since the earnings release.
Communication Services Select Sector SPDR Fund (XLC - Free Report)
This ETF tracks the communication services sector of the S&P 500 Index and has accumulated $7.17 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Alphabet Inc. Class A occupying the second position with 12.17% weight. The product charges 13 bps in annual fees. It has a Zacks ETF Rank #2 (Buy). The fund has gained around 1% since the earnings release (read: Oscar or Earnings: What Will Drive Netflix ETFs Ahead?).
iShares Global Comm Services ETF (IXP - Free Report)
This 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 67 stocks in its basket, with GOOGL taking the third spot at 11.1% share. The fund has amassed $236.7 million in its asset base. Expense ratio came in at 0.46%. IXP has a Zacks ETF Rank #3, with a Medium risk outlook. The fund has gained around 0.6% since the earnings release.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>