After the closing bell on Oct. 30, Facebook’s parent company, Meta Platforms (META Quick QuoteMETA - Free Report) came up with better-than-expected third-quarter 2024 results. The company beat on both the top and bottom lines but shares dropped 3% in aftermarket hours on warnings of more spending  (see: all the Communication ETFs here).

ETFs with a large allocation to this social media giant are in focus. These include iShares Global Comm Services ETF (IXP Quick QuoteIXP - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM Quick QuoteFCOM - Free Report) , Vanguard Communication Services ETF (VOX Quick QuoteVOX - Free Report) , Communication Services Select Sector SPDR Fund (XLC Quick QuoteXLC - Free Report) and First Trust Dow Jones Internet Index Fund (FDN Quick QuoteFDN - Free Report) .

Earnings in Focus

Adjusted earnings per share came in at $6.03, topping the Zacks Consensus Estimate of $5.19 and increasing 37% from the year-ago quarter. Revenues grew 19% year over year to $40.59 billion and came above the estimated $40.21 billion. Advertising revenues, which account for the majority of Meta’s business, jumped 18.6% to $39.56 billion.

Meta’s global daily active users on at least one of the Family of services (Facebook, WhatsApp, Instagram or Messenger) increased 5% year over year to 3.29 billion as of September. Zuckerberg said that Meta AI was on track to be the most-used AI assistant in the world and now has more than 500 million monthly active users. 

The world’s largest social media platform expects to post revenues in the range of $45-$48 billion for the fourth quarter. The Zacks Consensus Estimate is pegged at $46.18 billion. 

However, Meta warned that it expects a “significant acceleration” in infrastructure spending next year as it continues to pour money into developing AI. Chief executive Mark Zuckerberg pledged to spend significantly on infrastructure and other projects like the metaverse and AI-powered glasses. The company now expects to spend $38-40 billion on capital expenditures this year, compared with the previous forecast of $37-$40 billion.

ETFs in Focus

iShares Global Comm Services ETF (IXP Quick QuoteIXP - 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 23.9% share. Interactive media & services dominates the fund’s return at 54.4%, followed by integrated telecommunication services (16.7%). 

iShares Global Comm Services ETF has amassed $380.6 million in its asset base while trading at an average daily volume of 12,000 shares. The expense ratio is 0.41%. IXP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Google Soars on Upbeat Q3 Earnings: ETFs to Consider).

Fidelity MSCI Communication Services Index ETF (FCOM Quick QuoteFCOM - Free Report)  

Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 111 stocks in its basket, with Meta Platforms occupying the top position at 23.2%. 

Fidelity MSCI Communication Services Index ETF has amassed $1.2 billion in its asset base and trades in an average daily volume of 77,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.

Vanguard Communication Services ETF (VOX Quick QuoteVOX - Free Report)

Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 115 stocks in its basket, Meta Platform takes the top spot with a 23.1% share. Interactive media & services is the top sector, accounting for 49.4% of the portfolio, while movies & entertainment, integrated telecommunication services and cable & satellite round off the next three. 

Vanguard Communication Services ETF has AUM of $4.1 billion and trades in a good volume of 87,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.

Communication Services Select Sector SPDR Fund (XLC Quick QuoteXLC - Free Report)  

Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services and has accumulated $18.5 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 20.6% share. About 42% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two. 

Communication Services Select Sector SPDR Fund charges 9 bps in annual fees and trades in an average daily volume of 3.4 million shares. It has a Zacks ETF Rank #1 (Strong Buy).

First Trust Dow Jones Internet Index Fund (FDN Quick QuoteFDN - Free Report)

First Trust Dow Jones Internet Index Fund follows the Dow Jones Internet Composite Index, giving investors exposure to the broad Internet industry. It holds about 41 stocks in its basket, with Meta Platform occupying the top spot at 10.4%. 

First Trust Dow Jones Internet Index Fund is the most popular and liquid ETF in the broad technology space, with AUM of $6 billion and an average daily volume of around 231,000 shares. FDN charges 51 bps in fees per year and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.