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Meta Sinks on Weak Outlook Despite Q1 Beat: ETFs in Focus
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After the closing bell on Apr 24, Facebook’s parent company, Meta Platforms (META - Free Report) , reported better-than-expected first-quarter 2024 results, beating on both the top and bottom lines. However, the social media giant forecast weaker-than-expected revenues for the ongoing quarter and higher capital expenses for 2024.
The dismal outlook sent META shares tumbling as much as 19% in aftermarket hours. It plunged nearly 14% in pre-market trading at the time of writing, erasing nearly $200 billion from the company’s market valuation and bringing it down to about $1 trillion.
This has put ETFs having a large allocation to this social media giant in focus. These include Communication Services Select Sector SPDR Fund (XLC - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Vanguard Communication Services ETF (VOX - Free Report) , iShares Global Comm Services ETF (IXP - Free Report) and Global X Social Media Index ETF (SOCL - Free Report) .
Earnings in Focus
Adjusted earnings per share came in at $4.71, topping the Zacks Consensus Estimate of $4.32 and increasing from the year-ago earnings of $2.64. Revenues grew 27% year over year to $36.46 billion and came above the estimated $36.28 billion. Advertising revenues, which account for the majority of Meta’s business, jumped 27% to $35.64 billion.
Meta Platforms’ global daily active users on at least one of the Family of services (Facebook, WhatsApp, Instagram or Messenger) increased 7% year over year to 3.24 billion as of March (see: all the Communication ETFs here).
The world’s largest social media platform expects to post revenues in the range of $36.5-$39 billion for the second quarter. The Zacks Consensus Estimate is pegged at $38.54 billion.
Meta revealed that it will spend billions of dollars more than expected this year, fueled by investments in artificial intelligence. It raised its capital expenditure guidance to $35-$40 billion for this year from the earlier projection of $30-$37 billion and expects to increase it next year as well. The company also expects 2024 total expenses to be in the range of $96-99 billion, up from the prior outlook of $94-99 billion due to higher infrastructure and legal costs.
The stock is up about 40% so far this year after almost tripling last year.
ETFs in Focus
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services and has accumulated $17.4 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 23.3% share. About 49.2% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two (read: Communication ETF Hits a New 52-Week High).
Communication Services Select Sector SPDR Fund charges 9 bps in annual fees and trades in an average daily volume of 6 million shares. It has a Zacks ETF Rank #1 (Strong Buy).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
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 27.8%.
Fidelity MSCI Communication Services Index ETF has amassed $1 billion in its asset base and trades in an average daily volume of 104,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Make Your ETF Portfolio AI-Rich in Buffett-Like Manner).
Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 116 stocks in its basket, Meta Platform takes the top spot with a 22.4% share. Interactive media & services is the top sector, accounting for 51.1% of the portfolio, while movies & entertainment, cable & satellite, and integrated telecommunication services round off the next three.
Vanguard Communication Services ETF has AUM of $4 billion and trades in a good volume of 146,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
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 65 stocks in its basket, with Meta Platforms taking the top spot at 21.6% share. Interactive media & services dominates the fund’s return at 55.4%, followed by integrated telecommunication services (16.1%).
iShares Global Comm Services ETF has amassed $268.4 million in its asset base while trading at an average daily volume of 14,000 shares. The expense ratio is 0.42%. IXP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Global X Social Media Index ETF provides investors access to social media companies around the world and has amassed $136.2 million in its asset base. It tracks the Solactive Social Media Total Return Index, holding 45 securities in the basket. Meta Platforms occupies the second position with 10.1% of the assets.
Global X Social Media Index ETF charges 0.65% in annual fees and sees lower trading volumes of roughly 11,000 shares a day. The fund has a Zacks ETF Rank #3 with a High risk outlook.
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Meta Sinks on Weak Outlook Despite Q1 Beat: ETFs in Focus
After the closing bell on Apr 24, Facebook’s parent company, Meta Platforms (META - Free Report) , reported better-than-expected first-quarter 2024 results, beating on both the top and bottom lines. However, the social media giant forecast weaker-than-expected revenues for the ongoing quarter and higher capital expenses for 2024.
The dismal outlook sent META shares tumbling as much as 19% in aftermarket hours. It plunged nearly 14% in pre-market trading at the time of writing, erasing nearly $200 billion from the company’s market valuation and bringing it down to about $1 trillion.
This has put ETFs having a large allocation to this social media giant in focus. These include Communication Services Select Sector SPDR Fund (XLC - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Vanguard Communication Services ETF (VOX - Free Report) , iShares Global Comm Services ETF (IXP - Free Report) and Global X Social Media Index ETF (SOCL - Free Report) .
Earnings in Focus
Adjusted earnings per share came in at $4.71, topping the Zacks Consensus Estimate of $4.32 and increasing from the year-ago earnings of $2.64. Revenues grew 27% year over year to $36.46 billion and came above the estimated $36.28 billion. Advertising revenues, which account for the majority of Meta’s business, jumped 27% to $35.64 billion.
Meta Platforms’ global daily active users on at least one of the Family of services (Facebook, WhatsApp, Instagram or Messenger) increased 7% year over year to 3.24 billion as of March (see: all the Communication ETFs here).
The world’s largest social media platform expects to post revenues in the range of $36.5-$39 billion for the second quarter. The Zacks Consensus Estimate is pegged at $38.54 billion.
Meta revealed that it will spend billions of dollars more than expected this year, fueled by investments in artificial intelligence. It raised its capital expenditure guidance to $35-$40 billion for this year from the earlier projection of $30-$37 billion and expects to increase it next year as well. The company also expects 2024 total expenses to be in the range of $96-99 billion, up from the prior outlook of $94-99 billion due to higher infrastructure and legal costs.
The stock is up about 40% so far this year after almost tripling last year.
ETFs in Focus
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services and has accumulated $17.4 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 23.3% share. About 49.2% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two (read: Communication ETF Hits a New 52-Week High).
Communication Services Select Sector SPDR Fund charges 9 bps in annual fees and trades in an average daily volume of 6 million shares. It has a Zacks ETF Rank #1 (Strong Buy).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
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 27.8%.
Fidelity MSCI Communication Services Index ETF has amassed $1 billion in its asset base and trades in an average daily volume of 104,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Make Your ETF Portfolio AI-Rich in Buffett-Like Manner).
Vanguard Communication Services ETF (VOX - Free Report)
Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 116 stocks in its basket, Meta Platform takes the top spot with a 22.4% share. Interactive media & services is the top sector, accounting for 51.1% of the portfolio, while movies & entertainment, cable & satellite, and integrated telecommunication services round off the next three.
Vanguard Communication Services ETF has AUM of $4 billion and trades in a good volume of 146,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares Global Comm Services ETF (IXP - Free Report)
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 65 stocks in its basket, with Meta Platforms taking the top spot at 21.6% share. Interactive media & services dominates the fund’s return at 55.4%, followed by integrated telecommunication services (16.1%).
iShares Global Comm Services ETF has amassed $268.4 million in its asset base while trading at an average daily volume of 14,000 shares. The expense ratio is 0.42%. IXP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Global X Social Media Index ETF (SOCL - Free Report)
Global X Social Media Index ETF provides investors access to social media companies around the world and has amassed $136.2 million in its asset base. It tracks the Solactive Social Media Total Return Index, holding 45 securities in the basket. Meta Platforms occupies the second position with 10.1% of the assets.
Global X Social Media Index ETF charges 0.65% in annual fees and sees lower trading volumes of roughly 11,000 shares a day. The fund has a Zacks ETF Rank #3 with a High risk outlook.