Digital advertising has long been the growth engine of the advertising industry, thanks in large part to Google and Facebook, although contributions from some e-commerce platforms increase the attractiveness of exposure to this segment.
One of the ways to get this exposure is with the ARK Next Generation Internet ETF (NYSEArca: (ARKW)). Actively managed, ARKW is far from the mainstream internet exchange-traded fund, and although it does not currently own shares of Google’s parent company Alphabet (NASDAQ: GOOG) or Facebook (NASDAQ: FB) , it has exposure to digital advertising trends, which is positive for investors.
“We have increased our total ad spend estimates from 10.5% growth this year to 12.6%, with similar expectations for 9.5% growth in 2022. further increase,” says Morningstar analyst Ali Mogharabi.
Some of the ways ARKW obtains advertising exposure online include social media platforms, such as Twitter (NYSE: TWTR) and Snap (NYSE: SNAP). These stocks combine for nearly 7% of ARKW’s weight and Twitter is the fund’s second largest holding. The fund’s strong e-commerce exposure is also relevant in the conversation about digital ad spend.
“We expect e-commerce spending to grow at high single-digit rates through 2025. The pandemic experience with e-commerce has been a resounding success for consumers and businesses, and we expect what it modifies long-term behavior. In turn, this will drive growth in digital and global ad spend, ”adds Mogharabi.
This implies that the $ 6.35 billion ARKW is being used for economic recovery and the potential increase in consumer spending through holdings such as Shopify (NYSE: SHOP) and Etsy (NASDAQ: ETSY).
“Our projection that the unemployment rate will drop below pre-pandemic levels and remain low until 2025 bodes well for advertising demand,” Morningstar’s Mogharabi notes.
Apart from ARKW’s digital advertising exposure, the ARK fund is exposed to another attractive segment: iGaming and sports betting. Confirming ARK’s penchant for entering disruptive growth sectors and stocks early in the round, the issuer has been a regular buyer of DraftKings (NASDAQ: DKNG) and Genius Sports (NYSE: GENI) this year. .
Including ARKW, three ARK ETFs hold shares of DraftKings. In the case of the Internet ETF, the fund allocates almost 4.5% of its combined weighting to sports betting and iGaming giants DraftKings and Genius, the latter being a provider of sports betting data.
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The opinions and forecasts expressed herein are solely those of Tom Lydon and may not come to fruition. The information on this site should not be used or interpreted as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.