Tag Archives: nasdaq

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

3 Key Questions To Ask When Considering An ETF

Thinking about investing in exchange-traded funds (ETFs)? Be sure you can answer these questions before you do. Choosing investments for your portfolio is a complex-and sometimes emotional-process. It requires research, a clear understanding of your financial goals and time horizon, and, of course, money. And it can be overwhelming: should you go with stocks, bonds or mutual funds? How about gold? One security that has seen a surge in popularity over the past few years is the exchange-traded fund (ETF) . An ETF is an investment vehicle composed of pooled funds that owns shares of an asset, such as stocks, bonds or commodities, and trades on an exchange, just like a stock. In some cases, an ETF will track an index (the S&P 500, for example), which means it tries to match the index’s performance rather than beat it. According to a 2015 Charles Schwab Investor Study , millennial portfolios have the largest share of ETFs of any investing generation: on average, 40% of a millennial’s investments will be in ETFs. In fact, millennials dig ETFs so much that 61% of millennial investors surveyed said they would increase their ETF holdings in 2016. ETFs appeal to investors for several reasons. First, there’s the price tag. The minimum investment for a mutual fund can range from $500 to $3000 ; the minimum investment for an ETF is the fund’s market price, which can be as low as a couple of dollars. Then there’s the risk factor. Due to their composition, ETFs have more potential to mitigate losses in the event of a downturn than an investment concentrated in a single stock . ETFs also tend to be more tax-efficient than mutual funds because their structure minimizes the opportunity for taxable events-selling holdings, for instance-which can incur capital gains. Considering that there are over 1,500 ETFs available on the market, how do you go about choosing the right one? The following three questions are key when it comes to the ETF selection process. What is the underlying index? Some ETFs track easily recognizable indexes such as the S&P 500 or the Nasdaq 100. Others, such as the Global X Millennial Generation ETF , track new indexes that investors know very little about. Because ETFs usually track an index, it’s often quite easy to find out what their holdings are. Pay attention to what stocks and bonds are included in an ETF, as well as the weight assigned to the holdings. This will allow you to determine which ETFs offer the asset allocation you want. What are the true costs? Each ETF has an expense ratio. This number, which is expressed as a percentage, is a fund’s annual expenses divided by its average assets for the year. The expense ratio lowers your returns, and it isn’t the only cost associated with ETF investing. Given that ETFs trade like stocks, every purchase and sale incurs brokerage commission fees. Do the math and figure out which ETFs seem best positioned to give you the biggest bang for your buck. How liquid is it? The ease with which you can buy or sell shares of an ETF matters a lot: it’s the difference between making money and losing it. When an ETF has low liquidity, it becomes more difficult for an investor to sell their shares and make a profit. So what affects an ETF’s liquidity? Holdings, the holdings’ trading volume, the ETF’s trading volume and the market climate all play a role. Take a look at these factors to get a sense of how liquid or illiquid an ETF is. Keep in mind: the more the underlying holdings are traded, the more liquid they are, which, in turn, makes the ETF more liquid. Like any investment, there are pros and cons associated with investing in ETFs, but if you want to add some to your portfolio, be sure to ask the aforementioned questions. Doing so will help you choose the best ETFs for your investment needs.