New social media ETF draws attention

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If you are a hot young social media stock, what must you and your banker-advisors do to ensure your success in the aftermarket?

You need to maintain all the programs that newly public companies do in terms of IR initiatives, but you might also want to make sure you are included in the new Global X Social Media ETF, which is being billed as the first ETF to invest in these stocks. Some people think that the rise of ETFs has been a terrible development for small cap stocks, which no longer enjoy a lot of savvy stock research coverage as more funds have adopted the ETF approach. In this line of thinking, fundamentals matter a lot less. We can debate all day whether ETFs are good or bad for small caps. But the reality is they are a powerful presence that will not soon go away.

This might be seen as an extension of the index fund phenomena. In the early days of index funds, we heard some similar critiques. But companies that were included in certain indexes enjoyed a nice upward pressure over time. Most companies want to be in the major indexes. So it goes with ETFs. These stocks have certainly attracted lots of attention, though one down side is that it may make analyst coverage less likely. Going forward, the great ETF debate will continue to rage.

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