Tech-inspired speculators from Elon Musk to ordinary retail investors have shaken up commodities, cryptocurrencies and stocks this year, forcing institutions and regulators to reassess how they may impact markets.
In the latest example, Tesla disclosed today it had invested $1.5bn in bitcoin and plans to begin accepting it for payment for its electric cars, creating a rally in bitcoin to a record high of $44,100. Tesla said it purchased the bitcoins after changing its investment policy last month to “diversify and maximise” returns on its cash. Elon Musk has promoted both bitcoin and Dogecoin in recent days.
Meanwhile, hedge funds Two Sigma Investments and DE Shaw are nursing significant losses after an army of retail investors on Reddit upended the markets buying stocks such as GameStop. There are also concerns in Washington about how Wall Street market makers paid almost $3bn to retail brokers such as the Robinhood app to supply them with orders from retail investors for shares or options last year. Lex says this “payment for order flow” could represent a conflict of interest. Robin Wigglesworth comments GameStop could be emblematic of an inflection point for financial markets, with a new era of retail trading emerging.
In her column, Rana Foroohar says claims that the markets have been “democratised” and that people trading on their phones somehow represent a more inclusive capitalism are simply false. She argues: “Markets and democracy are not the same thing.” Rather, the furore around GameStop reflects a fundamental shift in the American economy from one in which prosperity was based on secure employment and income growth, to one in which companies and many consumers focus increasingly on ever-rising asset prices as the most important measure of economic health.
Finally, in a case of ‘If you can’t beat ‘em, join ‘em’, New York asset manager VanEck is betting that there is long term value in listening to social media chat and is launching an exchange traded fund to track the buzz. The Vectors Social Sentiment ETF will invest in the stocks being most talked up on social media.
1. Clubhouse blocked in ChinaChinese authorities moved on Monday to block access to Clubhouse, the hot invitation-only audio chat app, a day after we reported that Chinese internet users were offering hefty sums of cash to gain access so they could speak openly about sensitive topics free from government censorship.
2. SoftBank lays some golden eggsSoftBank’s Vision Fund has recorded its best performance since its launch in 2017 even as the group’s new trading arm racked up losses of $2.7bn from its “Nasdaq whale” trades in the final quarter of 2020. The Japanese tech conglomerate’s two Vision Funds reported a $13bn gain in the value of their investments in the fourth quarter, boosted by the rise in holdings of ride-hailing group Uber and DoorDash, the recently listed food delivery group. Alphaville was entertained as usual by the slide deck, this time showing a goose laying golden eggs.
3. Exclusive: TikTok’s US ecommerce push TikTok is planning an aggressive expansion into ecommerce in the US, going head-to-head with Facebook. The Chinese-owned viral-video app is set to unveil a tool that lets popular users share links to products and automatically earn commission on any sales, among other features.
4. Renesas in deal for DialogRenesas Electronics is to buy Apple supplier Dialog for €4.9bn in the latest deal by the acquisitive Japanese group aimed at expanding its chip portfolio beyond cars. Lex says that Dialog — US-founded, UK-domiciled and Frankfurt-traded — is no national champion to be defended and the deal looks likely to go ahead, as part of a wider consolidation in the semiconductor industry.
5. Hyundai says no Apple car talksHyundai Motor and its affiliate Kia said they are not in talks with Apple about developing autonomous vehicles, disappointing investors who sent shares in both South Korean carmakers lower. The pair said in a regulatory filing on Monday that they have been talking with multiple companies about co-operating to develop self-driving electric vehicles, but no decisions had been made.
The British tech entrepreneur Mike Lynch will this week begin his fight against extradition to the US, in the biggest test yet of whether British courts are willing to block the transfer of executives to face justice. Lynch has been charged with 14 counts of conspiracy and fraud linked to the $11.6bn sale of his former company, Autonomy, to HP.
Tuesday: User growth will be in focus when Twitter reports, after numbers disappointed in the third quarter. Revenues are expected to rise after advertisers resumed spending on digital ads with the partial return of sports and other live events. Networking equipment company Cisco Systems is expected to announce a fall in revenue. Ride-sharing service Lyft also reports. In South Korea, Kakao announces fourth-quarter earnings, as the country’s second-largest internet company prepares to list two financial affiliates this year. Analysts say Kakao's operating profit may have jumped more than 40 per cent in the October-to-December period from a year ago, thanks to increasing sales in ads and ecommerce.
Wednesday: Uber is likely to report revenue losses after the ride-sharing business has struggled in lockdowns. Investors will be on the watch for any commentary on profitability and sales in its Eats business. Mobile gaming group Zynga reports and dating app Bumble’s IPO is priced ahead of its listing. Former US cyber security chief Chris Krebs is set to testify in Congress on major cyber threats facing the US.
Thursday: Walt Disney is expected to report a fall in its first-quarter revenue, as its theme park operations are yet to see a full recovery from pandemic disruptions. Investors will watch out for numbers from its fast-growing Disney+ streaming platform.
Xiaomi launched its Mi 11 5G flagship smartphone beyond China today. Featuring a 6.8in Amoled display, triple rear cameras, including a 108MP main lens, and sound from Harman Kardon, it will be available in Europe in March at €749 for the 8GB memory/128GB storage version. The Verge says the slightly curved screen is very similar to what’s found in the Galaxy S21 Ultra. Xiaomi has also been showing off a “waterfall” concept phone where the screen flows off all four edges.