Facebook's (FB) first-quarter results will shine a light on just how large of the online advertising pool it's capturing and whether some additional growth drivers, like WhatsApp and Messenger are getting closer to being meaningful revenue contributors.
"We expect another strong performance from the leading social platform, reflecting solid user growth/engagement; robust demand for Facebook's mobile-first, digital video, and dynamic ad formats; and an overall enviable position in the digital advertising/media landscape given the substantial and ongoing secular shift toward mobile and digital video," Cantor Fitzgerald analyst Kip Paulson wrote in an investor note, ahead of earnings.
Facebook, along with Alphabet's (GOOGL) Google unit, has dominated online advertising, with products that capture the attention spans of users, ranging from Messenger to WhatsApp Instagram, all of which help Facebook capture more than 20 minutes per day of their users attention.
That's helped the company dominate the display advertising market, with more to come, per research firm eMarketer. The research firm expects Facebook's display business to rise 32% this year to $16.33 billion, due in large part to growth at Instagram.
Instagram, which recently announced it surpassed 700 million monthly active users, is expected to account for 20% of Facebook's mobile ad revenue this year, up from 15% in 2016.
In addition to mobile advertising trends, investors will also be looking to hear what the Mark Zuckerberg-led company has to say about Oculus and virtual/augmented reality, as well as any impact Snap Inc.'s (SNAP) Snapchat may be having on its business.
Analysts surveyed by Yahoo! Finance expect the Menlo Park, Calif.-based company to earn $1.12 a share on $7.83 billion in revenue for the period.
Over the past 12 months, shares of Facebook have gained nearly 28%, compared to the near 11% gain in the S&P 500.
Here are five ETFs that may benefit if investors like Facebook's first-quarter results.
Social Media Index ETF
The $83.5 million Social Media Index ETF (SOCL) has Facebook make up 11.43% of its portfolio, charging investors an expense ratio of 0.65%.
Cantor Fitzgerald's Paulson, who has an overweight rating and a $175 price target, expects Facebook's results to be led by mobile, with video increasingly playing a larger role.
"We're modeling ad revenue growth of 48.2% for 1Q17, a slight deceleration from +53.1% in 4Q16, but still ~3x the rate for the overall online ad market," Paulson wrote. "As social media spend continues to take share of integrated ad budgets, as more advertisers gain comfort with the platform (5M+ active advertisers as of early April), and as bid density/pricing moves higher, we see ~30% growth as sustainable for the next few years."
First Trust Dow Jones Internet Index Fund
The $3.87 billion First Trust Dow Jones Internet Index Fund (FDN) has Facebook make up 10.5% of its portfolio, charging investors an expense ratio of 0.57%.
RBC Capital Markets analyst Mark Mahaney expects another strong quarter and year for the social networking giant, with no real surprises. "Based on intra-quarter data points, channel checks, and our model sensitivity work, we view current Street Q1 ests as ballpark reasonable, though with limited room for upside," Mahoney wrote to investors. "In terms of the 2017 outlook, we would expect FB to reiterate its non-GAAP opex growth guidance of 47%-57%. GOOGL Q1 EPS provided a positive read into the health of the ad market."
Mahaney rates Facebook shares outperform with a $175 price target.
Technology Select Sector SPDR Fund
The $16.7 billion Technology Select Sector SPDR Fund (XLK) has Facebook make up 6.51% of its portfolio, charging investors an expense ratio of 0.14%.
Wells Fargo analyst Peter Stabler expects that any guidance on operating expenses will be conservative and likely trend down over the year, as they have in the past.
"However, given ongoing platform investments (e.g., virtual and augmented reality) and likely increasing investments in video content via a combination of revenue share applying to in-stream video advertising and upfront content licensing deals, we have chosen to model expense growth squarely within FB's guided range," Stabler added.
PowerShares NASDAQ Internet Portfolio ETF
The $311.2 million PowerShares NASDAQ Internet Portfolio ETF (PNQI) has Facebook make up 8.21% of its portfolio, charging investors an expense ratio of 0.60%.
iShares U.S. Technology ETF
The $3.26 billion iShares U.S. Technology ETF (IYW) has Facebook make up 7.65% of its portfolio, charging investors an expense ratio of 0.43%.