Investing

The Facebook Halo-Effect Lifts All Social Players (SOCL, IPG, GS, MSFT, LNKD, ZNGA, FFN, GSVC)

The social media hype around the Facebook IPO is driving many shares in the sector of online social media.  Some of the Halo-effect may not even be deserved, and this has all the ingredients of another bubble in the making even if it is nowhere near fully inflated.  Take a look at the Global X Social Media Index ETF (NASDAQ: SOCL), which closed up yet another 2% at $14.89 on 176,000 shares on Thursday.  This marked the fifth consecutive day of gains and on the fifth consecutive day of higher trading volume as you will see below:

  • Feb 01 traded 125,300 shares and closed at $14.59
  • Jan 31 traded 58,300 shares and closed at $14.25
  • Jan 30 traded 33,400 shares and closed at $14.28
  • Jan 27 traded 16,200 shares and closed at $14.20
  • Jan 26 traded 400 shares and closed at $13.50
  • Jan 25 traded 1,300 shares and closed at $13.59

We said it before and we will say it again… This ETF owns no shares of Facebook as of yet.  It will have to after the Facebook IPO but it does not now.  Interpublic Group of Companies, Inc. (NYSE: IPG) owns shares but barely rose today.  Affiliates of Goldman Sachs Group Inc. (NYSE: GS) own shares, and Microsoft Corporation (NASDAQ: MSFT) owns shares.  The social media company only has a halo-effect around the theme of social media.

Facebook is and was one of our Top 17 IPOs For 2012, but so was Twitter, Living Social and Yelp.

LinkedIn Corporation (NYSE: LNKD) closed up 6.4% at $76.98 solely on being a rival and Zynga Inc. (NASDAQ: ZNGA) rose 16% to $12.39 due to its being north of 10% of Facebook’s revenues.

What is so funny is that even FriendFinder Networks Inc. (NASDAQ: FFN), the adult-themed social networking site and one of the worst IPOs of modern time, rose solely because of the social media halo.  That gain was 16% to $1.33 against a 52-week range (actually under a year) of $0.51 to $10.01.

The one business development company which does own Facebook shares is GSV Capital Corporation (NASDAQ: GSVC).  Its shares have risen since the impending filing was telegraphed last Friday and the stock rose by over 7% to $18.51 today.

This is called the Halo-effect if there ever was one.

Facebook’s full IPO details are here.

JON C. OGG

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