Tag Archives: investing

What Do Twitter And Zynga Earnings Mean For Social Media ETF?

The Global X Social Media Index ETF (NASDAQ: SOCL ) is going through a rough patch. The ongoing tech rout, mainly instigated by overvaluation concerns amid broad-based gloom and a weak guidance issued by LinkedIn Corporation (NYSE: LNKD ) , was already there to punish the fund (read: LinkedIn Crashes: Should You Connect with Social Media ETF? ). Then, fresh woes emanated from the fourth-quarter earnings results from social networking site Twitter (NYSE: TWTR ) and social game developer Zynga (NASDAQ: ZNGA ) will likely compel investors to stay away from the social media ETF in the near term. Twitter’s Q4 in Detail The company’s fourth-quarter 2015 loss per share (excluding the stock-based compensation expense) of $0.07 was narrower than the Zacks Consensus Estimate of $0.13 loss per share. Including the stock-based compensation expense, the company posted a loss of $0.13 per share on a GAAP basis. This was narrower than the year-ago loss of $0.20 per share. The company’s non-GAAP earnings (excluding the stock-based compensation expense) were $0.16 per share, up 33.3% year over year. Revenues of $710.5 million in the quarter missed the Zacks Consensus Estimate of $718 million. Revenues were up 48.3% from the year-ago period. Absent the impact of negative currency translation, revenues grew 53%. The company finished the quarter with an average 320 million monthly active users (MAU). This indicated no change quarter over quarter and 9% year-over-year expansion. Although this is the first quarter that Twitter has seen no user growth sequentially, investors clearly could not digest the fact. The blow came in the form of guidance as well. Twitter anticipates total revenue between $595 million and $610 million for the first quarter of 2016, way below the Zacks Consensus Estimate which was pegged at $630 million prior to the release. Market Impact The soft MAU metric, an earnings miss and soft revenue guidance dampened investors’ mood as the stock tumbled 3% after hours. Year to date, the stock is down 35.3%. In the last one year, the stock has plunged about 70%. Twitter has a Zacks Rank #3 (Hold), which is subject to change post earnings release. The stock is a good growth and momentum play with a Zacks Style Score of ‘A’, but it lacks the value quotient as indicated by the score of ‘F’. There is a high chance that Twitter will decline in the coming trading sessions, especially given the ongoing correction in the online and social media space. Zynga’s Q4 in Detail GAAP loss per share (excluding the stock-based compensation expense) of $0.02 cents was narrower than the Zacks Consensus Estimate of $0.04 cents loss per share. Including the charges, GAAP loss was $0.5 per share, same as the year-ago quarter. Zynga’s revenues of $185.8 million beat the Zacks Consensus Estimate of $177 million. Zynga also failed to live up of analysts’ projection as it expects first-quarter 2016 revenues in the range of $160-$175 million, below the Zacks Consensus Estimate of $177 million. Market Impact Zynga also saw a landslide in its shares after hours with a 10.8% plunge. Year to date, the stock is down 20.5%. Though the stock currently has a Zacks Rank #3, it looks like that the rank is due for a downgrade. The stock is a decent momentum play with a Zacks Style Score of ‘A’, but its value and growth scores are not optimistic. Social Media ETF in Focus Notably, Twitter does not have a sizable exposure in the overall ETF world, with SOCL holding just 2.7% share in it. However, the company’s results are crucial to the entire social media sector. Plus, a freefall in the shares of Zynga – which accounts for about 3% of SOCL – will make matters worse. However, SOCL has strong long-term fundamentals and carries a Zacks ETF Rank #2 (Buy). So, investors having a strong gut for risks can play this dip. SOCL is down 19.3% so far this year (see all technology ETFs here). Link to the original post on Zacks.com

Is DXJR The Best ETF To Play Japan Now?

Late last week, Bank of Japan’s (BOJ) move to impose a negative interest rate for the first time in its history took the markets by surprise. Global economic woes – the decline in crude oil prices and weak data from emerging and other export-based countries including China – led to the move. The BOJ’s step helps the third-largest country in the world to get closer to its target inflation rate of 2%. It is an effort to boost confidence and spending by companies and households. The BOJ Governor Haruhiko Kuroda has stated that there is no limit to efforts for easing monetary policy. The central bank may further expand asset purchases if required. Sub-zero interest rate measures are nothing new. Last year, the European Central Bank (ECB) had cut down interest rates to negative to lower borrowing costs, encourage bank lending and combat deflation. Denmark, Sweden and Switzerland adopted a similar measure in the past. Meanwhile, the ECB has hinted on further policy easing in its March 2016 meeting. It is expected that the ECB may further cut interest rates in response to persistently low inflation and volatility in the financial markets. The ECB president Mario Draghi identified turbulence in global markets along with plummeting oil prices as a contributing cause for Eurozone’s low inflation. Real Estate Stands to Benefit Interest rates have a profound effect on credit availability and cost of real estate mortgages. A low interest rate environment improves an individual’s ability to purchase properties by reducing the cost of mortgage capital, thereby boosting demand. A favorable consumer spending scenario and strong recovery plan could play an important role in boosting the housing market. Given this, investors may take advantage by investing in real estate ETFs based in Japan such as the WisdomTree Japan Hedged Real Estate ETF (NYSEARCA: DXJR ) . The fund tracks the performance of the WisdomTree Japan Hedged Real Estate Index, thereby providing exposure to the Japanese Real Estate sector. The fund also hedges exposure to fluctuations between the U.S. dollar and the yen. Thus, this ETF appears to be a strong bet at a time of significant foreign exchange fluctuation. The ETF charges 48 bps in fees and gained 6.2% in the last 5 days (as of February 3, 2016). The fund currently has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook, suggesting that it will outperform the broad market funds in the coming months. Original Post

The Impact Patent Trolls Have On Innovation

Companies filing lawsuits over patents is nothing new. In fact, many big brands that do business together have a different relationship inside the courtroom (take, for example, Apple and Samsung ). But the recent verdict on the Apple ( AAPL ) and VirnetX Holding Corporation ( VHC ) patent case has once again