Social media has become part of many people’s daily live. There are 5.17 billion people who are active social media users as of 2024, equating to 62.3 percent of the world’s total population. The growth is not stopping, it is estimated that by 2027, the number of global social media users will reach 5.85 billion.
Individuals use social media networks to keep in touch with their friends and share content with a global audience. Businesses and corporations leverage social media networks for customer engagement and advertising. While account opening on a social media site is often free, the platform can be monetized by advertisement and paid promotion of content. In fact, the rich user-data allows for much more precisely targeted advertising on social media networks compared to conventional advertising channels. It is not surprising that online advertising has overtaken TV, radio and print advertising.
The popularity of social media sites varies by region. With respect to the fact that about a third of global internet users are based in Asia, we include ADRs in our strategy. Furthermore, we implement a smart filter to narrow down the selection of companies represented in the strategy: popularity and increasing growth projections are the criteria for inclusion.
Portfolio Construction
· Universe
The investment universe consists of U.S.-listed stocks, including American Depositary Receipts (ADRs), with each stock having a market capitalization exceeding USD 50 million and an average daily trading liquidity of more than USD 5 million.
· Selection Methodologies
Our construction methodology involves selecting up to 20 stocks from companies that can be classified as social media networks. The selection criteria are based on the popularity of their platforms and the growth in their valuation, as indicated by an increase in their price-to-earnings (P/E) ratio. This approach ensures that we focus on the most influential and financially promising social media companies in the market.
· Weighting Method
Equally weighted.
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