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What's in Store for Facebook ETF in Q1 Earnings?

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Social media giant Facebook (FB - Free Report) is set to release first-quarter fiscal 2020 results on Apr 29 after market close. The stock has tumbled 12.8% over the past three months, underperforming the industry, which has lost around 8% in the same time frame.

However, shares of FB are up 14.5% over the past month buoyed by COVID-19 pandemic, which has led to higher demand for e-commerce. The momentum is expected to continue if the company beats estimates in the soon-to-be reported quarter (read: FAANG ETFs in the Spotlight Ahead of Q1 Earnings).



Earnings Whispers

Facebook has a Zacks Rank #3 (Hold) and an Earnings ESP of +1.41%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for Q1 earnings indicates whopping growth of 107.1% from the year-ago reported figure. Revenues are expected to increase 14.7% in the soon-to-be-reported quarter. The stock belongs to a top-ranked Zacks Industry (top 14%) and has a Growth Score of B.

However, Facebook saw negative earnings estimate revision of 10 cents over the past 30 days for the soon-to-be-reported quarter. Analysts decreasing estimates right before earnings — with the most up-to-date information possible — is a not a good indicator for the stock. The company delivered an average negative earnings surprise of 22.08% in the past four quarters.

 

Facebook, Inc. Price, Consensus and EPS Surprise

Facebook, Inc. Price, Consensus and EPS Surprise

Facebook, Inc. price-consensus-eps-surprise-chart | Facebook, Inc. Quote

Nearly 96% of the analysts provided a Strong Buy or a Buy rating ahead of the company’s earnings, per the Zacks methodology.

What’s Hot?

Last month, the social media giant said it is experiencing a huge surge in usage in areas most affected by the pandemic but warned of weak advertising revenues. Total messaging increased more than 50% in March while voice and video calling more than doubled on Messenger and WhatsApp in many of the countries hit hardest by the virus (read: Should You Buy Facebook ETFs as Coronavirus Boosts Traffic?).

In order to tap the booming demand for video conferencing triggered by the coronavirus outbreak, Facebook launched a videoconferencing tool, which allows users to host video calls of up to 50 people. The tool will be rolled out gradually. The social media giant also unveiled other video-calling and livestreaming features for a newly developed platform on Messenger, called Messenger Rooms. In particular, the company expanded WhatsApp group video and voice calls to allow up to eight people from four previously and will introduce video chats on Facebook Dating in the coming months.

ETFs in Focus

Given this, ETFs having the highest allocation to the social media giant will be in focus going into its earnings announcement. These funds would be the potential movers if Facebook comes up with a positive earnings surprise. While there are several ETFs in the space with FB in their basket, we have highlighted six funds that have the social media giant in their top five holdings:

Communication Services Select Sector SPDR (XLC - Free Report) — The ETF has accumulated $7.4 billion and has a Zacks ETF Rank #2 (Buy). Facebook takes the top spot with 19.6% of the portfolio (read: Stocks Look Set for a Rally: Top-Ranked ETFs to Buy).

Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) — This fund manages $428.5 million in its asset base and has a Zacks ETF Rank #3 (Hold). Facebook takes the top spot, making up for 15.7% share.

Vanguard Communication Services ETF (VOX - Free Report) — The fund has $1.9 billion in AUM and carries a Zacks ETF Rank #3. Facebook occupies the second position and accounts for 15.2% share.

iShares Global Comm Services ETF (IXP - Free Report) — This fund has AUM of $242.9 million and a Zacks ETF Rank #3. Facebook takes the top spot, making up for 12.6% share.

MicroSectors FANG+ ETN (FNGS - Free Report) - This ETN accounts for 10% share in Facebook and has accumulated $36.6 million in its asset base.

Global X Social Media Index ETF (SOCL - Free Report) — The fund has amassed $114.6 million in its asset base and carries a Zacks ETF Rank #2. Facebook takes the top spot with 9.6% allocation.

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