Social Media ETFs Are Quietly Outperforming
Many of the world's largest social media stocks have been showing relative strength this year after underperforming in 2014. Social media giants such as Facebook Inc (NASDAQ: FB), Twitter Inc (NYSE: TWTR), LinkedIn Corp (NYSE: LNKD) and Japan-based Tencent Holdings Ltd (OTC: TCTZF)/TENCENT HOLDINGS ADR (OTC: TCEHY) are all trading higher in 2015 and beating the broad-based U.S. stock indices.
Social Media Stocks
After gapping up in July 2014, Facebook went sideways until late last week when the stock broke above significant resistance to a new all-time high. The move followed an announcement that money transfers will be a new added feature of its Messenger app, which has more than 500 million users. The stock is up over 10 percent since the beginning of the year.
Twitter struggled in 2014 after peaking (shortly after the company went public), losing over 43 percent. However, the stock has managed to rally in 2015, fueled by stronger than expected user data. The stock gapped higher in February and has since consolidated as the buyers took a breather. That is until this week when the stock rallied to its best level since last October on heavy volume. The latest move has the stock up over 40 percent in 2015.
The Japanese social media giant Tencent had a mediocre 2014, up 13 percent. The stock has exploded in 2015 up 28 percent so far and breaking above strong resistance at $17.80.
Last but certainly not least, LinkedIn has finally broke above highs from September 2013 and seems to be fully recovered from its eight-month long selloff that immediately followed the September highs. The stock was up just 6 percent in 2014 and is up almost 16 percent in 2015. It recorded an all-time high of $276.18 in late February and has created support at the $260 area.
Highlighted below is the only social media ETF on the market, which has all the stocks mentioned above in its top 10 holdings.
Social Media ETF
The Global X Funds (NASDAQ: SOCL) tracks the largest social media companies around the word, with 50 percent of its holdings in the United States and 28 percent located in China.
The top individual holdings include:
- LinkedIn with a 12.7 percent holding
- Tencent Holdings LTD making up 12.3 percent of the ETF
- Facebook making up 10.6 percent of the fund
The ETF is up 9 percent this year after losing 15 percent in 2014. Following the pattern of some of the ETF's largest holdings, SOCL is trading at the best level since November of last year. The next resistance level to watch is $20.77.
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