No thanks for the meme-ories

Tech investors of all persuasions have a right to be depressed at present, from Nasdaq trackers to crypto fans. Even the denizens of message boards known for their arch boosterism ought to feel a tad unenthused.

As Steve Johnson reports, Reddit’s Wall Street Bets crowd may once have vowed to take meme stocks “to the moon”, but instead they and the exchange traded funds that focus on them have been eclipsed by steady, boring earthbound investments.

By early this week, the Roundhill Meme ETF (MEME) had plunged nearly 60 per cent since launching in December, with the VanEck Social Sentiment ETF (BUZZ) crashing 40 per cent and the SoFi Social 50 ETF (SFYF) 35 per cent over the same period.

“This is an investment strategy that has fizzled out in 2022,” said Todd Rosenbluth, head of research at ETF Trends. “A meme approach to investing is a risk-on approach that is not working [this year].”

“Not working this year” would also describe crypto lender Celsius Network’s strategy. Kadhim Shubber and Scott Chipolina note a 50 per cent decline this year in the value of assets deposited on its platform, a sign of the pressure the industry is facing in the wake of falling digital token prices. Celsius, which borrows cryptocurrencies from its customers and lends them out to earn a return, had just under $12bn of assets as of May 17, down from more than $24bn in late December 2021.

Still, Celsius says it had “minimal exposure” to the $40bn collapse of the stablecoin terraUSD along with its sister token Luna last week, and it halved its borrowings of the tether stablecoin in recent months.

Luna’s crash landing has focused attention on the standards that crypto exchanges apply when they decide to list a coin. The likes of Binance and Coinbase are the first port of call for many novice crypto investors and they are supposed to vet tokens before they are made available to their millions of users.

James Kaufmann, partner at law firm Howard Kennedy, says regulation provides stock exchanges with a clear set of listing criteria to enforce, whereas crypto markets operate on the basis of “buyer beware”. “The clue is in the name isn’t it: is it a crypto exchange or a stock exchange?” he said.

Gillian Tett’s latest column asks whether a Goldilocks moment has arrived for digital assets, where the key players and policymakers can now embrace reform to weed out the bad, while retaining some of the good.

Back on the regular markets, Lex looks at how the slump in tech stocks has triggered a buyback bonanza. So far in 2022, Amazon has announced its first buyback scheme since 2016, Alphabet is planning a new $70bn programme and Apple a $90bn one.

So at least they can be cheerful as they buy back more shares for their money — the Nasdaq is currently down another 2.5 per cent, at the end of a week where Wall Street stocks have fallen into a bear market.

The Internet of (Five) Things

1. Musk denies sexual harassment allegations
Elon Musk has responded to a media report alleging that SpaceX paid a flight attendant $250,000 to settle claims of sexual harassment against him, saying the “wild accusations are utterly untrue”. According to the Business Insider report, Musk was accused by the flight attendant of exposing himself to her in 2016 and offering to buy her a horse in exchange for an erotic massage.

2. Grab sees post-pandemic recovery
South-east Asian super app Grab has cut quarterly losses for the first time in 18 months, sending its shares up 24 per cent after a long decline following a Spac merger in which it listed with a valuation of $40bn. Grab said it expected to record revenues of at least $1.2bn for the full year, up 78 per cent, as the easing of pandemic restrictions increased demand for ride-hailing services.

3. Canada cuts the line on Chinese 5G
Canada said it would move to ban Huawei and ZTE from providing 5G services, in the latest move by a US ally to target the Chinese equipment telecoms manufacturers.

4. Vodafone gets time for turnround — analysis
The surprise arrival of the UAE group, formerly known as Etisalat, to take pole position on Vodafone’s shareholder list, “gives management a bit of breathing space”, says one major investor. Vodafone’s chief executive Nick Read “will probably be given at least this year” to show he can turn round the business.

5. Japanese film industry opposes ‘fast movies’
Japanese film production companies have launched a civil lawsuit claiming copyright infringement over their feature films being turned into 10-minute “fast movies” popular with younger viewers on YouTube. Thirteen leading companies including Toho, Toei Company and Shochiku allege three people created the shorter versions without consent, in order to generate ad revenues.

Tech tools — Amazon Fire 7 tablet

They may not be the most desirable of slabs, but Amazon does offer great value tablets and it has just updated its Fire 7 model for the first time in three years. Costing just $60 (£60) when it ships in June, the 7in model has a 30 per cent faster processor, 40 per cent more battery life and double the RAM memory of its predecessor. A USB-C has also been added for easier charging. There is also a more colourful Kids version (£110) that includes entertainment and educational content for children.