ETFs to Watch as META Sinks Post Q2 Earnings Miss, Poor Cash Position

While the latest share pullback might encourage investors to see this as a golden opportunity to invest in the WhatsApp owner, some might remain skeptical about investing in this stock, considering the overall market’s edginess over the exploding AI investments across the board. 

Nevertheless, the company’s strengthening advertising business, along with the significant gains from its content recommendation initiatives, should continue to fuel its revenue growth in the long term. 

Against this backdrop, investors who believe in Meta’s long-term trajectory, yet wish to avoid the idiosyncratic risk and sharp volatility of a single-stock position, may find a middle ground in exchange-traded funds (ETFs). By selecting funds that feature Meta Platforms as a top-10 holding, investors can capture the potential upside of a rebound while mitigating the impact of company-specific shocks on their overall portfolio.

However, to determine if this post-earnings pullback is a temporary stumble or a sign of deeper structural shifts, it is essential to look beyond the headline figures. Before exploring the best ETFs for gaining exposure to Meta, let us examine the company’s second-quarter performance across other key operational metrics.

A Brief Analysis of META’s Q2 Results

META’s second-quarter earnings of $6.18 per share missed the Zacks Consensus Estimate by 13%, while revenues beat the consensus mark by 1%. On a year-over-year basis, the trend remained similar, with the bottom line falling 13.4% even as the top line grew a robust 28%.

The total number of ad impressions served across META’s services increased 14%, driven primarily by growth in engagement and users, as well as ad load optimizations. 

On the other hand, the global average price per ad increased 12% year over year in the second quarter, as META benefited from ad performance gains, improved macro conditions and currency tailwinds. 

On the operational front, Meta advanced its user understanding models to analyze ads and organic activity and simultaneously improve both user experience and advertiser performance in the second quarter. Combined with its GEM model for ads ranking and sequence learning, these advancements generated an 8.3% increase in ad clicks and a 15.7% uplift in conversions on Facebook.  

Its AI-powered Advantage+ end-to-end solutions showed solid growth, reaching over $75 billion in annual revenue run rate. 

Its Reality Labs segment continued to incur operating losses despite generating positive revenue growth. This unit’s loss widened from $4.53 billion a year ago to $4.62 billion in the second quarter. The reported figure beat analysts’ expectations of a loss of $5.07 billion (analysts polled by StreetAccount, as cited in CNBC). 

Looking ahead, META’s management believes that its distribution advantages will allow it to serve AI products that are valuable for everyone, both its 3.6 billion users and millions of businesses, over the long run. 

As far as its near-term outlook is concerned, META has raised the lower end of its 2026 total expenditure outlook to incorporate the $2.4 billion charge related to legal proceedings, which it recognized in the second quarter. The company now expects its total expenses to be in the range of $165-$169 billion compared with its earlier guidance of $162-$169 billion.

META-Heavy ETFs to Watch

Vanguard Communication Services ETF VOX 

This fund, with net assets worth $5.7 billion, offers exposure to 112 U.S. companies within the communication services sector. Of these, META carries the first spot, holding 20.31% of the fund. 

VOX has risen 4.8% over the past year. The fund charges 9 basis points (bps) as fees. It traded at a volume of 0.40 million shares in the last trading session. 

Global X PureCap MSCI Communication Services ETF GXPC  

This fund, with net assets worth $184.1 million, offers exposure to 24 U.S. companies in the communication services sector. Of these, META is at the third spot, holding 19.50% of the fund. 

GXPC has soared 13.4% over the past year. The fund charges 15 bps as fees. It traded at a volume of 0.30 million shares in the last trading session. 

Communication Services Select Sector SPDR ETF XLC  

This fund, with assets under management (AUM) worth $22.14 billion, offers exposure to 23 companies from the telecommunication services, media, entertainment and interactive media & services industries. Of these, META is at the top spot, holding 17.22% of the fund. 

XLC has inched up 0.4% over the past year. The fund charges 8 bps as fees. It traded at a good volume of 10.08 million shares in the last trading session.

iShares Global Comm Services ETF IXP  

This fund, with net assets worth $548.5 million, offers exposure to 64 media, telecom, and internet companies worldwide, from the communication services sector. META holds the top spot, with 16.93% share in the fund. 

IXP has gained 0.7% over the past year. The fund charges 40 bps as fees.  It traded at a volume of 0.02 million shares in the last trading session. 

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This article originally published on Zacks Investment Research (zacks.com).

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