Social Media and Video Gaming ETFs Outperform YTD Due to Global Growth Prospects

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Social media and video gaming ETFs have significantly outperformed both U.S. and global equity benchmarks this year. The VanEck Video Gaming and eSports ETF (ESPO) and Global X Video Games & Esports ETF (HERO) were up 38.2% and 42.1% year to date through Aug. 18, respectively. These results compare to 10.1% and 13.5% for the iShares Core S&P 500 ETF (IVV) and iShares MSCI ACWI ETF (ACWI), respectively, which serve as benchmarks for U.S. and global equities. Over the same period, the Global X Social Media ETF (SOCL) and Amplify Video Game Tech ETF (GAMR) were up 38.3% and 43.3%, respectively. However, the returns for these four ETFs are more volatile than the broader market, with trailing one-year volatility ranging from 22.4% to 27.2%, relative to 19.0% for IVV (see Table 1).

Although the four largest ETFs in this category have all had strong returns, their performance has been driven by different types of stock holdings. ESPO and HERO primarily have exposure to video game development, platform providers, and eSports content businesses. SOCL has more targeted exposure to companies in the areas of social networking and media applications. Finally, GAMR is more focused on hardware and tilts more to mega-caps, with “Magnificent 7” stocks making up several of its top holdings.

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Top Holdings & Return Contributors

The returns for ESPO and HERO have been led by growth in video gaming and mobile advertising platforms, particularly those scaling outside the U.S. For example, Roblox Corp. and AppLovin Corp. are among the top contributors to ESPO’s return this year (see Table 2). CFRA’s fundamental equity research team has a positive outlook for Roblox based on the long-term growth trajectory of its unique user-generated content platform. It has 111.8 million daily active users (up 41% year-over-year), with Asia-Pacific showing exceptional momentum at 75% year-over-year bookings growth, although profitability remains a concern. The positive drivers for AppLovin include the rollout of its self-service platform to advertisers and expansion into new markets outside of the U.S. ESPO and HERO also hold stocks listed outside the U.S., including Chinese tech stocks like gaming companies NetEase Inc. and Tencent Holdings Limited.

The largest contributors to SOCL’s strong returns this year have been operators of social media or music platforms. This includes Meta Platforms and Reddit, as well as Tencent Music Entertainment Group and Spotify. In the social media category, CFRA continues to have a Buy rating on Meta, which reflects the firm’s opportunity to monetize artificial intelligence in areas such as improved advertising, more engaging user experiences, and new devices such as glasses. In the music category, CFRA’s fundamental equity team views Spotify as a growth stock that has been executing on growing both its ad-supported and subscription revenue. However, valuations remain rich for the stock, with the team’s 12-month target price of $675 assuming a forward enterprise value-to-EBITDA ratio of 42.7x our 2026 EBITDA, and 12-month revenue growth needs to be higher than 15% to justify that valuation.

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GAMR has the highest returns among video gaming and social media ETFs, largely due to its mega-cap and technology tilt. Chip manufacturers Advanced Micro Devices and NVIDIA are the top two contributors to GAMR’s returns this year as of Aug. 18. That has been augmented by its other holdings, such as Tencent and Roblox.

Historical Performance and Volatility

Of the four largest ETFs in the video gaming and social media category, ESPO bounced back the fastest from the 2022 downturn. In 2022, all four were down between 33.4% and 42.2%, as Information Technology and Communication Services had a very challenging year. However, ESPO bounced back the fastest, beating the S&P 500-tracking IVV in 2023 and 2024, as well as 2025 through August 18. The biggest stock contributor to ESPO’s three-year bounce back was Nvidia, which the ETF no longer holds. Since the ETF does not currently have Nvidia as a constituent, the future returns of ESPO will likely track more closely with that of HERO.

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These four ETFs have a much higher three-year annualized volatility than the broader market, since Communication Services and Information Technology stocks tend to be highly cyclical. All of them significantly underperformed IVV during the 2022 market downturn but are outperforming this year as investors are in risk-on mode (see Table 3). However, during the rebound in these trailing three years, all four ETFs had annualized volatility above 22.9% compared to just 17% for IVV. Investors will need to factor this higher risk profile into their portfolio allocation decisions.

Looking Ahead

If the U.S. Federal Reserve makes two rate cuts this year and the U.S. economy can avoid a recession, that should favor video gaming and social media ETFs. Revenues for these firms are supported by corporate advertising and discretionary consumer spending, both of which are highly economic cycle-dependent. If tariff uncertainty does not impact global growth in the rest of 2025, these ETFs should continue to rebound from their last downturn in 2022.

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