Market Overview

How Alibaba's Earnings Are Hitting These 3 ETFs

How Alibaba's Earnings Are Hitting These 3 ETFs

After its $25 billion IPO and an epic first two months of trading, Alibaba Group Holding Ltd (NYSE: BABA) has finally come down to earth following sub-par third-quarter earnings. The selling has sent the stock back to where the opening price after the IPO in September.

Alibaba opened at $92.70 September 19, 2014, and hit $120 by the second week of November – a 27 percent gain in under two months. Since hitting the high, the stock has experienced a steady decline down to $100 before opening even lower after the disappointing earnings report.

Despite the Chinese Internet giant increasing revenue 40 percent to $4.22 billion, analysts were expecting $4.45 billion. Earnings per share came in at $0.81, which was above estimates of $0.75. Missing revenue on the first earnings report as a public company is not exactly a confidence booster; however, Alibaba remains an e-commerce giant in an area of the world where its services are in demand more than ever.

Highlighted below are a number of ETFs that have been affected by the stock's sell off.

Related Link: Stifel Downgrades Alibaba On Counterfeit Issue Regulator

Krane Shares CSI China Internet ETF

The KraneShares Trust (NASDAQ: KWEB) is a fairly new ETF that launched at the end of July 2014. The ETF tracks publicly traded China-based companies whose primary businesses are in the Internet or Internet-related sectors.

The portfolio is comprised of 53 holdings with the top holdings being:

  • Tencent Holdings Ltd at 10 percent
  • Alibaba making up 9.2 percent
  • Inc (ADR) (NASDAQ: JD) coming in at 7.6 percent

KWEB is about even over the last 12 months, 14 percent over the last six and down just under 2 percent on the day after Alibaba's earnings. The ETF has an expense ratio of 0.68 percent.

Renaissance IPO ETF

The Renaissance IPO ETF (NYSE: IPO) tracks stocks in the early stages of their publicly traded lives. The holdings are typically added within the first five days of trading and removed roughly two years later when it has become a seasoned stock.

The top three holdings in the ETF include:

  • Zoetis Inc (NYSE: ZTS) at 10 percent
  • Alibaba making up 9.1 percent
  • Twitter Inc (NYSE: TWTR) at 8.2 percent

The ETF is up 4 percent over the last 12 months and down 1 percent over the last six months. The ETF also fell by approximately 2 percent after the earnings release. IPO has an expense ratio of 0.60 percent.

Global X NASDAQ China Technology ETF

The Global X China Technology ETF (NASDAQ: QQQC) provides investors with exposure to 32 companies within the technology sector in China.

The top individual holdings include:

  • Tencent Holdings Ltd at 9.3 percent
  • NetEase, Inc (ADR) (NASDAQ: NTES) making up 8.7 percent
  • Lenovo Group Limited (ADR) (OTC: LNVGY) coming in at 8 percent

Alibaba is the seventh-largest holding at 4.2 percent. QQQC is down 1 percent over the last 12 months and down 9 percent over the last six months. The ETF was holding up better than the first two ETFs highlighted, losing less than 1 percent after the earnings announcement. The ETF has an expense ratio of 0.65 percent.


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