Facebook and Twitter Power Social Media ETF (SOCL, FB, TWTR, GOOG, YNDX)
Shares of the Global X Social Media ETF (NYSE: SOCL) are higher by over 1.5 percent in early trading Monday as the ETF attempts to close at its best level ever.
The move in the ETF is led by the big names that investors have become familiar with over the last few years.
Facebook (NASDAQ: FB) is surging over four percent today to a new all-time high as it trades as a member of the S&P 500 Index for the first time. The stock is now up 115 percent for the year and is well off the 2013 low of $22.67. With a forward P/E ratio of 50.6 and a PEG ratio of 2.1 the stock is fairly valued. However, the exuberance over the social media stocks has picked back up recently and shares continue to attract new money. FB is the number one holding of SOCL with an allocation of 10.6 percent.
The other big name in the sector, Twitter (NYSE: TWTR), is also hitting a post-IPO high today with a gain of 3 percent. In the last month the stock is up over 55 percent after moving sideways during its first month of trading. The questions about when/if TWTR will become profitable have subsided as the stock has become a momentum play in a sector that is red hot. At some point in the near future investors will begin to question the stocks valuation, but as long as the momentum traders like the stock the upside is limitless. TWTR is the fifth largest holding of SOCL and it makes up 5.8 percent of the portfolio.
A social media name not known to many U.S. investors is Yandex (NASDAQ: YNDX). The Russian company is similar to what Google is to the U.S.; the company offers a search engine, email, maps, a marketplace, and other online and mobile services. The stock is up over 5 percent today to a new historic high, following in the footsteps of its American peers. From a valuation standpoint, YNDX is the most attractive with a PEG ratio of only 1.16. Due to its location, Russia, the valuation will almost always be lower than that of the U.S. peers. YNDX makes up 4.8 percent of SOCL and is the eighth largest holding.
SOCL has been a big winner this year with a gain of 63 percent. Looking ahead to 2014, it could be an exciting year for social media and SOCL. There are rumors that several big name companies in the sector could go public, allowing SOCL to buy up shares once they are traded on a major stock exchange. A few names in the rumor mill are Pinterest, Shazam, and Airbnb.
The ETF has $113 million in net assets and charges an annual expense ratio of 0.65 percent.
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