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Google ETFs Gain Despite Mixed Earnings Amid Coronavirus Crisis
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Google-parent Alphabet (GOOGL - Free Report) reported mixed first-quarter 2020 results, with earnings missing and revenues topping estimates. Despite the mixed results, shares of Alphabet have gained as much as 8.9% since the release on Apr 28.
Earnings at a Glance
Earnings per share were $9.87, missing the Zacks Consensus Estimate of $10.97 and declining 35.7% sequentially and 17.1% 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), came in at $33.7 billion, down 11.5% sequentially but up 14.3% year over year. Net revenues beat the Zacks Consensus Estimate by 3.4% backed by strength in the company’s cloud and YouTube businesses amid the coronavirus crisis.
Beginning fourth-quarter 2019, Alphabet disaggregated its revenue segments on a more detailed basis, including Search, YouTube ads and Cloud. Revenues from Google-owned and partner sites within the search business grew 11.6% and 4.1% year over year, accounting for 69.3% and 12.7% of quarterly revenues, respectively. This led to a year-over-year increase of 10.4% in total advertising revenues. YouTube revenues increased 33.4% year over year to $4 billion, accounting for 9.8% of quarterly revenues. Google other revenues — which consists of YouTube non-advertising revenues — were $4.4 billion in the first quarter, up 22.5% year over year. Moreover, Google cloud rose 52.1% year over year to $2.8 billion, accounting for 6.7% of quarterly revenues.
Meanwhile, TAC was down 12.3% sequentially but up 8.6% 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 four ETFs with double-digit exposure to Alphabet (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 112 stocks in its basket, Alphabet takes the top spot with 22.7% share. VOX has AUM of $1.89 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 4.8% since Alphabet’s earnings release (read: What's in Store for Facebook ETF in Q1 Earnings?).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 104 stocks in its basket, with Alphabet occupying the second position at 11.17%. The product has amassed $432.1 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 4.6% since the earnings release.
The 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 $7.40 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 11.26% weight. The product charges 13 bps in annual fees. It has a Zacks ETF Rank #2 (Buy). The fund has gained around 4.8% since the earnings release (read: Stocks Look Set for a Rally: Top-Ranked ETFs to Buy).
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 68 stocks in its basket, with GOOGL taking the second spot at 10.2% share. The fund has amassed $242.3 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 4.3% since the earnings release.
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Google ETFs Gain Despite Mixed Earnings Amid Coronavirus Crisis
Google-parent Alphabet (GOOGL - Free Report) reported mixed first-quarter 2020 results, with earnings missing and revenues topping estimates. Despite the mixed results, shares of Alphabet have gained as much as 8.9% since the release on Apr 28.
Earnings at a Glance
Earnings per share were $9.87, missing the Zacks Consensus Estimate of $10.97 and declining 35.7% sequentially and 17.1% 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), came in at $33.7 billion, down 11.5% sequentially but up 14.3% year over year. Net revenues beat the Zacks Consensus Estimate by 3.4% backed by strength in the company’s cloud and YouTube businesses amid the coronavirus crisis.
Beginning fourth-quarter 2019, Alphabet disaggregated its revenue segments on a more detailed basis, including Search, YouTube ads and Cloud. Revenues from Google-owned and partner sites within the search business grew 11.6% and 4.1% year over year, accounting for 69.3% and 12.7% of quarterly revenues, respectively. This led to a year-over-year increase of 10.4% in total advertising revenues. YouTube revenues increased 33.4% year over year to $4 billion, accounting for 9.8% of quarterly revenues. Google other revenues — which consists of YouTube non-advertising revenues — were $4.4 billion in the first quarter, up 22.5% year over year. Moreover, Google cloud rose 52.1% year over year to $2.8 billion, accounting for 6.7% of quarterly revenues.
Meanwhile, TAC was down 12.3% sequentially but up 8.6% 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 four ETFs with double-digit exposure to Alphabet (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 112 stocks in its basket, Alphabet takes the top spot with 22.7% share. VOX has AUM of $1.89 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 4.8% since Alphabet’s earnings release (read: What's in Store for Facebook ETF in Q1 Earnings?).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 104 stocks in its basket, with Alphabet occupying the second position at 11.17%. The product has amassed $432.1 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 4.6% since the earnings release.
The 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 $7.40 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 11.26% weight. The product charges 13 bps in annual fees. It has a Zacks ETF Rank #2 (Buy). The fund has gained around 4.8% since the earnings release (read: Stocks Look Set for a Rally: Top-Ranked ETFs to Buy).
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 68 stocks in its basket, with GOOGL taking the second spot at 10.2% share. The fund has amassed $242.3 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 4.3% 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 >>