ETFs offer investors the ability to invest in a particular theme while maintaining the protection of diversification. However, when one company expands its business so much that it has its claws in every aspect of a particular market, it can become almost like an ETF unto its own.
That may be the case for Facebook Inc (NASDAQ:FB), which now has a major presence in almost all segments of the social media business. Facebook is no longer simply about user profiles and likes, the company is now at the forefront of virtual reality (Oculus), photo and video sharing (Instagram), messaging (WhatsApp) and news and content apps. In other words, a bet on social media is a bet on Facebook.
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An expert with StockTwits said the platform is seeing a lot of chatter about this idea. Users like Facebook's ability to be a "diversified play on social," a social ETF of sorts.
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Of course, for investors that want even more diversification than Facebook can provide, there actually is a social media ETF, Global X Funds (NASDAQ:SOCL), which includes holdings such as LinkedIn Corp (NYSE:LNKD) and Twitter Inc (NYSE:TWTR). However, in terms of returns, these two massive underperformers are one of the major reasons why the social media ETF has significantly lagged Facebooks performance of late.
At one time, Facebook was a website about user profiles, but the company has expanded its business to the point where it may now single-handedly be the best diversified investment in social media.
Disclosure: the author holds no position in the stocks mentioned.
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