Facebook Stands Apart In Social Media ETF

Social media stocks have undergone a transformation from Wall Street darlings to highly scrutinized organizations.  The accumulation of users is no longer the driving force behind the cache of a social media company, rather it’s how they can monetize those users to create revenue and drive shareholder value.

Last year the red-hot social media trend peaked with the initial public offering of messaging service Twitter, Inc (TWTR), which marked a significant turning point in this industry group.  The frenzied sentiment for new social media stocks has since been cooled by the appeal of large companies with established business models. 

This year, the majority of stocks in the Global X Social Media ETF (SOCL) have underperformed the broader market.  SOCL has dropped 8.58 percent so far in 2014, while the SPDR S&P 500 ETF (SPY) has gained 7.99 percent.

SOCL tracks 27 global companies engaged in social networking, file sharing, and other web-based applications.  The fund currently has $134 million in total assets and charges an expense ratio of 0.65 percent. 

While that recent underperformance is concerning, the breakdown of underlying holdings shows that one social media network in particular is rising above the rest.   

Facebook Inc. (FB) is the largest holding in SOCL with 11.92 percent of the total assets attributed to this stock.  So far this year Facebook has jumped 37.82 percent and now sports a market capitalization of over $190 billion.

FB also just recently reported a surge in revenue in the most recent quarter as a result of a spike in mobile ad sales that shareholders have been looking for.  This growth in revenue and focus on quality is part of what sets the company apart from its competitors in the space.   

Both LinkedIn (LNKD) and Yelp (YELP) are set to report earnings next week, which might have a big impact on SOCL.  This ETF will be one to watch through the remainder of 2014 as the shakeup in social media continues.