Will Google ETFs continue to shine on Q1 earnings optimism? – April 29, 2021
Google-parent Alphabet (GOOGL – Free Report) recently released its first quarter 2021 results, with earnings and revenue exceeding estimates and increasing year over year. Notably, Alphabet’s share price has jumped about 3% since the release of impressive results on April 27.
First Quarter Results Snapshot
Earnings per share were $ 26.29, beating Zacks’ consensus estimate by 68% and increasing 166.4% year-over-year. Revenue totaled $ 55.31 billion, up 34.4% year-over-year (32% at constant exchange rates). Net revenue, excluding total traffic acquisition cost or TAC (TAC is the share of revenue shared with Google partners, and the amount paid to channel partners and others who drive traffic to Google’s website) , amounted to $ 45.60 billion. Net revenue topped Zacks’ consensus estimate of 7.4%, largely due to strong performance in the company’s search, cloud and YouTube businesses.
Alphabet’s business segments include Google services, Google Cloud and other betting. Revenue from the Google services business increased 34% year-over-year to $ 51.18 billion, or 92.5% of quarterly revenue. In the service industry, search revenue for Google-owned sites increased 30.1% year-on-year to $ 31.88 billion. YouTube’s ad revenue grew 48.7% year-over-year to $ 6 billion, while the network’s ad revenue rose 30.2% to $ 6.8 billion.
Google’s other revenue – which is made up of non-advertising revenue from Google Play and YouTube – was $ 6.49 billion for the first quarter, up 46.4% year-over-year. Google’s total ad revenue grew 32.3% year-over-year to $ 44.68 billion.
Additionally, Google Cloud’s revenue grew 45.7% year-over-year to $ 4.05 billion, or 7.3% of quarterly revenue. Notably, with the worsening coronavirus situation, some industries like cloud computing have flourished with the majority of people working from home. Other betting revenue was $ 198 million, up 46.7% year over year, representing 0.4% of total first quarter revenue.
Meanwhile, the APR rose 30.3% year-over-year to $ 9.71 billion.
Commenting on the results, Sundar Pichai, CEO of Google and Alphabet, reportedly said, “Over the past year, people have turned to Google search and many online services to stay informed, connected and entertained. We have continued to focus on providing trusted services to help people around the world. Our cloud services help businesses large and small to accelerate their digital transformations. “
ETFs at a glance
Profit results could have a huge impact on ETFs that are heavily invested in this internet giant. Below we have highlighted four ETFs with double digit exposure to Alphabet (see: all tech ETFs here).
Vanguard Communications Services ETF (VOX – Free report)
This fund targets the communications sector by tracking the MSCI US Investable Market Communication Services 25/50 index. Holding 113 shares in its basket, Alphabet takes second place (class A) and third place (class C), with respectively 11.2% and 11.1% of the shares. VOX has an AUM of $ 3.76 billion and charges 10 basis points (bps) in annual fees.
It has gained 0.7% since the release of Alphabet’s first quarter results. The fund has a Zacks ETF Rank # 3 (Hold), with a medium risk outlook (read: ETFs to Win on Biden’s Infrastructure Plan).
Fidelity MSCI Communication Services Index ETF (FCOM – Free report)
This fund follows the MSCI USA IMI Communication Services 25/50 index. He holds 103 shares in his basket, Alphabet occupying the second (class A) and third (class C) at 11.18% and 11.05%. The product has amassed $ 742.7 million in its asset base and charges 8 basis points in annual fees.
The fund is up 0.7% since the results of earnings. He has a Zacks ETF Rank # 3, with a medium risk outlook.
The SPDR Fund for the Select Communication Services Sector (XLC – Free report)
This ETF tracks the communications services sector of the S&P 500 Index and has accumulated $ 13.10 billion in its asset base. It follows the index of the select sector of communication services and holds 26 shares in its basket, Alphabet Inc. Class A and Alphabet Inc. Class C occupying the second and third position, with 12.83% and 12.40% respectively. weightings. The product charges 12 basis points in annual fees.
The fund is up 0.9% since the publication of results. It has a Rank 2 (buy) Zacks ETF (read: Will Disney ETFs (DIS) Shine After Q1 Profits?).
IShares Global Comm Services ETF (IXP – Free report)
This ETF provides global exposure to companies in media, entertainment, social media, search engines, video / games and telecommunications services by tracking the S&P Global 1200 Communication Services 4.5 / 22.5 / 45 Capped Index. He has 70 shares in his basket, Alphabet Inc. Class A and Alphabet Inc. Class C occupying the second and third position, with weights of 12.50% and 12.09%, respectively. The fund raised $ 321.8 million in its asset base. Its expense ratio is 0.46%.
The fund has gained 1.3% since the publication of results. IXP has a Zacks ETF Rank # 3, with a medium risk outlook.
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