In a retreating market, social media and internet-related exchange traded funds stood out Friday after Twitter (NasdaqGS: TWTR ) initiated talks with several large technology companies, seeking potential suitors for an acquisition.
Twitter has received expressions of interest from several technology companies and may receive a formal bid shortly, reports David Faber for CNBC .
TWTR shares surged 19.1% Friday on the potential acquisition talks.
Meanwhile, the Global X Social Media Index ETF (NasdaqGM: SOCL ) , which includes a large 8.9% weight in TWTR, gained 1.3% on Friday.
Other tech-related ETFs with large Twitter exposure also strengthened or at least helped offset the broader market sell-off on the acquisition talks. The Sprott BUZZ Social Media Insights ETF (NYSEArca: BUZ) , which analyzes social media data to single out bullish investment perceptions on certain brands or companies, including 3.0% in TWTR, was flat on Friday. The PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI ) was down 0.1% and First Trust Dow Jones Internet Index Fund (NYSEArca: FDN ) was 0.2% lower; both funds target internet-related companies. including 2.6% and 2.4% in TWTR, respectively. The SPDR S&P Internet ETF (NYSEArca: XWEB) , which holds 2.1% TWTR, was also flat.
“From a strategic standpoint, we think from it would be more beneficial for Alphabet as opposed to Salesforce,” Morningstar analyst Ali Mogharabi told Reuters , referring to multinational conglomerate and parent company of Google.
Morningstar believes Twitter shares can be sold for at least $22 per share. TWTR was trading at $22.3 at last check Friday.
The potential suitors are said to be interested in the data that Twitter generates, along with its place as a media company.
However, Twitter as a company has missed Wall Street’s sales expectations over the first two quarters of the year and has yet to produce a net profit after 11 quarters as a public company. The social media firm has accumulated a loss of almost $2.3 billion since inception.
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Global X Social Media Index ETF
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This article was provided by our partner Tom Lydon of etftrends.com.