Yahoo Finance Meta Reports Best Quarter in Two Years: ETFs in Focus
After the closing bell on Oct 25, Facebook’s parent company Meta Platforms META reported its most profitable quarter in years and the highest quarterly revenues since going public more than a decade ago. Its third-quarter 2023 revenues and earnings outpaced estimates.
The third-quarter results are the strongest since Mark Zuckerberg rebranded the company from Facebook to Meta almost two years ago. META shares spiked as much as 5% initially in aftermarket hours but erased those gains and closed about 3% lower following Meta's warning of weaker advertising trends in the fourth quarter.
Investors can tap the opportune moments with ETFs having a large allocation to this social media giant. These include Communication Services Select Sector SPDR Fund XLC, Fidelity MSCI Communication Services Index ETF FCOM, Vanguard Communication Services ETF VOX, iShares Global Comm Services ETF IXP and Global X Social Media Index ETF SOCL.
Earnings in Focus
Adjusted earnings per share came in at $4.39, topping the Zacks Consensus Estimate of $3.62 and increasing 168% from the year-ago quarter. Earnings more than doubled as the company’s “year of efficiency” turnaround strategy is paying off. Revenues grew 23% year over year to a record $34.1 billion and came above the estimated $33.45 billion. This marks the company’s highest quarterly sales number since it went public in 2012 (read: Guide to the Magnificent Seven Stocks & ETFs Investing).
Meta Platforms’ global daily active users increased 5% year over year to 2.09 billion. Monthly active users grew 3% year over year to 3.05 billion. The company stated that about 3.14 billion people used at least one of the Family of services (Facebook, WhatsApp, Instagram or Messenger) every day, on average, as of September.
The world’s largest social media platform expects to post revenues in the range of $36.5-$40 billion for the fourth quarter. The Zacks Consensus Estimate is pegged at $38.72 billion. However, Meta warned of continued macroeconomic uncertainty and lower advertising demand in the current quarter. It plans to spend heavily on newer businesses, including virtual reality and artificial intelligence.
ETFs in Focus
Communication Services Select Sector SPDR Fund (XLC)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services and has accumulated $14 billion in its asset base. It follows the Communication Services Select Sector Index and holds 22 stocks in its basket, with Meta Platforms occupying the top position at 24.9% share. About 50.5% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two (see: all the Communication ETFs here).
Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 6 million shares. It has a Zacks ETF Rank #3 (Hold).
Fidelity MSCI Communication Services Index ETF (FCOM)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 110 stocks in its basket, with Meta Platforms occupying the top position at 20.3% (read: Tap These Stocks & ETFs to Play Like Billionaires).
Fidelity MSCI Communication Services Index ETF has amassed $796 million in its asset base and trades in an average daily volume of 111,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
Vanguard Communication Services ETF (VOX)
Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 117 stocks in its basket, Meta Platform takes the top spot with a 20.05% share. Interactive media & services is the top sector, accounting for 48.6% of the portfolio, while movies & entertainment, cable & satellite, and integrated telecommunication services round off the next three.
Vanguard Communication Services ETF has AUM of $3.4 billion and trades in a good volume of 157,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
iShares Global Comm Services ETF (IXP)
iShares Global Comm Services 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 64 stocks in its basket, with Meta Platforms taking the top spot at 19.1% share. Interactive media & services dominates the fund’s return at 50%, followed by integrated telecommunication services (18.4%).
iShares Global Comm Services ETF has amassed $278.8 million in its asset base while trading at an average daily volume of 9,000 shares. The expense ratio comes in at 0.42%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.
Global X Social Media Index ETF (SOCL)
Global X Social Media Index ETF provides investors access to social media companies around the world and has amassed $139.7 million in its asset base. It tracks the Solactive Social Media Total Return Index, holding 44 securities in the basket. Meta Platforms occupies the top position with 14.3% of the assets (read: ETFs in Focus as Snap Beats on Both Lines in Q3 Earnings Release).
Global X Social Media Index ETF charges 0.65% in annual fees and sees lower trading volumes of roughly 6,000 shares a day. The fund has a Zacks ETF Rank #3 with a High risk outlook.
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Global X Social Media ETF (SOCL): ETF Research Reports
Vanguard Communication Services ETF (VOX): ETF Research Reports
Fidelity MSCI Communication Services Index ETF (FCOM): ETF Research Reports
iShares Global Comm Services ETF (IXP): ETF Research Reports
Communication Services Select Sector SPDR ETF (XLC): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
