U.S. Markets closed

Social Media ETF Shakes Off Facebook Tumble


Global X Social Media Index ETF (SOCL) managed to hold its head above water Monday despite a sharp decline in shares of Facebook (FB), the fund’s fifth-largest holding, on worries the stock is still overvalued.

Facebook shares were off more than 10% at one point Monday, triggering Nasdaq circuit breakers designed to prevent short sellers from piling on and driving the stock down further.

Facebook slipped 8% in afternoon trading while SOCL rose 0.8% at last check.

The stock accounts for 6% of the social media ETF’s portfolio. The fund, which was launched in November 2011, holds $15.3 million in assets.

Investors hammered Facebook shares after a Barron’s weekend story saying the stock may only be worth $15. “That would be roughly 24 times projected 2013 profit and six times estimated 2013 revenue of $6 billion, still no bargain price,” Barron’s said.

Facebook shares were trading just above $21 on Monday following the sell-off. The social network company’s stock is down more than 40% from the dismal IPO.

“Facebook is building the foundation to revolutionize online advertising. However, lack of near-term visibility and cloudy advertising metrics may temporarily stall revenue and profit growth,” Morningstar says in an analyst report on the stock.

SOCL, the social media ETF, is up 5.7% year to date.

Global X Social Media Index ETF

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.