After the closing bell on October 30, Facebook’s parent company, Meta Platforms META, reported strong third-quarter 2024 results that surpassed expectations. Despite beating analyst estimates on earnings and revenue, shares fell 3% in after-hours trading due to warnings of increased spending (see: all the Communication ETFs here).
Highlights from Meta’s Earnings Report
Meta’s adjusted earnings per share came in at $6.03, exceeding the Zacks Consensus Estimate of $5.19 and showing a 37% increase from the previous year. The company generated revenues of $40.59 billion, a 19% rise year over year, which also topped the estimated $40.21 billion. Most importantly, advertising revenues—Meta’s primary source of income—rose 18.6% to $39.56 billion.
As of September, Meta’s global daily active users across the Family of services (which includes Facebook, WhatsApp, Instagram, and Messenger) grew 5% from last year to reach 3.29 billion. CEO Mark Zuckerberg noted that Meta AI is on track to become the most-used AI assistant globally, currently having over 500 million monthly active users.
Looking ahead, Meta forecasts fourth-quarter revenues between $45-$48 billion, while the Zacks Consensus Estimate stands at $46.18 billion.
However, concerns arose over planned spending, as Meta warned of a “significant acceleration” in infrastructure expenditures for the coming year, aiming to strengthen investments in AI. Zuckerberg committed to substantial spending on infrastructure and ventures such as the metaverse and AI-powered glasses. This year’s capital expenditure forecast ranges from $38-$40 billion, slightly up from an earlier range of $37-$40 billion.
ETFs Tracking Meta Platforms
iShares Global Comm Services ETF (IXP)
The iShares Global Comm Services ETF provides worldwide exposure to companies in media, entertainment, social media, search engines, video/gaming, and telecommunications by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It contains 65 stocks, with Meta Platforms holding the top position at 23.9%. The fund’s returns are primarily driven by interactive media & services, which account for 54.4%, followed by integrated telecommunication services (16.7%).
As of now, IXP has $380.6 million in assets and trades an average of 12,000 shares daily, with an expense ratio of 0.41%. It boasts a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Fidelity MSCI Communication Services Index ETF (FCOM)
The Fidelity MSCI Communication Services Index ETF tracks the MSCI USA IMI Communication Services 25/50 Index. This ETF includes 111 stocks, with Meta Platforms at a 23.2% share.
FCOM has $1.2 billion in assets under management (AUM) and trades approximately 77,000 shares daily. The ETF charges 8 basis points in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
Vanguard Communication Services ETF (VOX)
The Vanguard Communication Services ETF also focuses on the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. With a total of 115 stocks, Meta Platforms is again in the lead with a 23.1% share. The largest sector is interactive media & services, making up 49.4% of the composition.
VOX has an AUM of $4.1 billion, with average daily trading volume of 87,000 shares. It charges an annual fee of 10 basis points and holds a Zacks ETF Rank #3 with a Medium risk outlook.
Communication Services Select Sector SPDR Fund (XLC)
The Communication Services Select Sector SPDR Fund targets firms in telecommunications, media, and interactive media & services. It has an AUM of $18.5 billion, tracking the Communication Services Select Sector Index and holding 22 stocks, with Meta Platforms at 20.6% of the portfolio. Approximately 42% of XLC’s assets are in interactive media & services.
XLC charges an annual fee of 9 basis points and trades an impressive average of 3.4 million shares daily. It carries a Zacks ETF Rank #1 (Strong Buy).
First Trust Dow Jones Internet Index Fund (FDN)
The First Trust Dow Jones Internet Index Fund follows the Dow Jones Internet Composite Index, offering broad exposure to the Internet industry. It has around 41 stocks, with Meta Platforms making up 10.4%.
FDN is one of the most popular ETFs in the tech space, holding $6 billion AUM and trading around 231,000 shares daily. The annual fee is 51 basis points, and it also has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
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First Trust Dow Jones Internet ETF (FDN): ETF Research Reports
Vanguard Communication Services ETF (VOX): ETF Research Reports
Fidelity MSCI Communication Services Index ETF (FCOM): ETF Research Reports
iShares Global Comm Services ETF (IXP): ETF Research Reports
Communication Services Select Sector SPDR ETF (XLC): ETF Research Reports
Meta Platforms, Inc. (META): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
