Social Media Mania: An ETF That Rules All Things Social

Tweet it, Snap it, post it, share it. Social media has changed the way we communicate faster than anyone could have imagined.

In just over a decade companies like Facebook, Reddit and Twitter have shaken up nearly every industry and society. When we want to get our message out, we log on, click and share. From the biggest brands to people in the smallest towns, social media has given many people a voice.

About three quarters of U.S. citizens use social media to connect, share news and information, find jobs, and for entertainment. That compares to about five percent who did so in 2005, according to the Pew Research Center.

What are social media companies?

Social media companies are online communications channels dedicated to community-based input, interaction, content-sharing and collaboration. These companies have allowed masses of people from all over the world to share news, photos, jokes and videos with one another, almost in real time.

Think disappearing messaging app Snapchat, which lets you communicate with networks of friends via pictures and videos that vanish after a day. Twitter turned 140 character bursts of communication (now 280 characters) into a phenomenon that has changed the face of elections and revolutions.

Facebook, which has made the thumbs-up icon the universal symbol for “I like it,” is the largest company in this sector, with 2 billion active monthly users around the globe. From a site for students wanting to connect with each, it’s become the world’s photo album, news outlet, and place to discover new brands and message their friends.

Twitter has 328 million active users. And Snapchat, which had one of the biggest initial public offerings in history, has 173 million. Instagram, purchased by Facebook in 2012 for $1 billion has 800 million users.  China’s TenCent is one of the biggest players in the sector, with hundreds of subsidiaries involved in everything including Internet services, Ecommerce, gaming and social media. Its WeChat messaging service has close to a billion active monthly users, as of late 2017.

*Source: CNBC

How do social media companies affect the world around us?

Social media has been a democratizing medium. Anyone can upload a video to YouTube and find an audience. You can post your resume to LinkedIn and dozens of employers can see your resume. You can post a video of your puppy doing something adorable and suddenly, your canine companion is the unlikely animal friend to millions.

Social media has created celebrities — and helped those celebrities launch careers and financial empires. Tarder Sauce, the sour-faced feline better known as Grumpy Cat, was launched into fame via Instagram. The Swedish gamer Pew Die Pie, (born Felix Kjellberg) went from a modest vlogger to a mega-media powerhouse with  more than 50  million subscribers on YouTube. Twenty-year-old Lele Pons started as a Vine star. (Twitter shut down its 6 second video platform in 2016). Her popularity across multiple social media platforms—including Instagram, Twitter and YouTube—has made her a spokesperson with big-name brands, such as DirecTV, Coca-Cola, and Starbucks.

Social media has also given people an unprecedented ability to speak directly to the companies with which they do business. Customers can communicate with brands and expect a response. In turn, brands can measure the response to campaigns quickly and target their audiences with precision in order to sell more products.

Social media has also become a shaper of elections, both in America and abroad. In recent years, it’s also acted as force for social change and protest, as the uprisings of the Arab Spring attest. Protests, marches and movements all come with a hashtag to rally forces and political leaders turn to social media to speak to their followers.

Social Media Mania: What’s inside the fund

Social Media Mania is an exchange-traded fund (ETF). This investment offers exposure to 32 companies, including Facebook, Twitter, China’s Tencent Holdings, Google’s parent company Alphabet, online deals coupon company Groupon, not to mention disappearing message app Snapchat, owned by its parent company Snap.

More than half of the stocks it holds are for companies that are outside the U.S., with more than a third invested in China’s software and network companies.

Many of the companies don’t fit into the traditional definition of social media. For example, Tencent in addition to being a social network is an ecommerce platform. Similarly, the fund has about half-a-dozen gaming companies including King Digital and Zynga, producer of such games as Candy Crush and Farmville.

Want to dive deeper? Social Media Mania is based on a Global X fund called SOCL.

What are the risks?

Stash has rated Social Media Mania a moderate-risk investment.

That said, this fund focuses on one sector, which is the social media component of the technology industry. Stash recommends that owners of this fund diversify their portfolio with the Stash foundation fund Moderate Mix as well as funds that follow other sectors, such as Blue Chips, Live Long and Prosper or Clean and Green.

Key takeaways:

  • Social media is one of the tech industry’s hottest growth sectors.
  • Social Media Mania is a fund (ETF) that offers you exposure to  some of the biggest social media companies, such as Facebook, Twitter, and Google.
  • The fund also includes some of the biggest global players, including Tencent Holdings, and Renren.



Source: Tradeview. Chart operates in real time, with delays. *See Footnote



Footnotes
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