Index Performance Update
Source: Bloomberg, as of 12/31/22. Past performance is not a guarantee of future results. Index returns are presented for illustrative purposes only. The index is unmanaged and its returns do not reflect the deduction of any fees or expenses. You cannot invest directly in an index.
Source: Bloomberg, as of 12/31/22. Past performance is not a guarantee of future results. Index returns are presented for illustrative purposes only. The index is unmanaged and its returns do not reflect the deduction of any fees or expenses. You cannot invest directly in an index.
Largest Movers
Leaders
- Tencent (700 HK): +16.3% MTD, -24.4% YTD
- Nike (NKE): +7.0% MTD, -29.0% YTD
- Baidu (BIDU): +5.3% MTD, -7.5% YTD
Laggards
- Unity (U): -27.6% MTD, -80.0% YTD
- Krafton (259960 KS): -22.7% MTD, -65.5% YTD
- Coinbase (COIN): -22.6% MTD, -86.0% YTD
Source: Bloomberg, as of 12/31/22. MTD refers to “month-to-date” performance, YTD refers to “year-to-date” performance.
Capital Markets Activity
December 5
Loft Dynamics raised $20 million in financing and changed its name from VRM Switzerland. The company is the creator of the “world’s first and only virtual reality simulator authorized by a major aviation regulator.” CEO Fabi Riesen stated that the new identity and funding may help the company expand out of Europe and fulfill pilot training needs worldwide.
December 6
Free-to-play gaming platform startup Cubzh raised $3 million in seed funding. Similar to Roblox, Cubzh allows creators to make their own objects and worlds which other players can interact with. CEO Adrien Duermaël said that even those without scripting experience could become creators as well.
December 8
Founders Fund led a $2.3 million seed round into The Mirror, a game development platform incorporating real-time collaboration. The platform also features a marketplace where users can buy and sell user created content.
December 26
According to a report from The Telegraph, Saudi Arabia’s Public Investment Fund took a majority stake in U.S. augmented reality company Magic Leap. The PIF previously led a $400 million funding round for the company in 2018. The Magic Leap 2 headset went on sale last September for $3,299, and was aimed at enterprises rather than retail consumers, which was the focus of its predecessor.
December 30
Meta acquired Dutch smart eyewear company Luxexcel for an undisclosed amount. Luxexcel, which started as a prescription lens manufacturer in 2009, holds the patent on 3D printing of prescription lenses, which can be integrated wearable technology to potentially create AR glasses.
Industry/Company Highlights
December 2
Meta released a nine-page policy paper titled "Economic Opportunities in the Metaverse: A Policy Approach." The paper described three key tenets the metaverse economy should follow to promote innovation. These include adopting a technology neutral approach, recognizing the role of decentralized systems, and embracing greater collaboration between the public sector and industry.
December 16
John Carmack, co-founder of id Software, resigned from his position as Meta’s consulting CTO for the company’s VR initiative. He compared Meta’s VR efforts to a GPU with a 5% utilization number, and expressed frustration with the organization’s efficiency in spite of its large headcount.
December 20
Mark Zuckerberg delivered testimony in federal court to defend Meta’s acquisition of VR fitness startup Within. The case outcome will determine whether Meta can go through with the acquisition immediately, or if a lengthier proceeding that could last two years would be initiated.
December 21
Fidelity filed three Web3-related trademark applications with the U.S. Patent Trademark Office. These trademarks covered NFTs and NFT marketplaces, virtual real estate investing, and cryptocurrency trading. Fidelity’s cryptocurrency platform debuted in November, which comes with no funding minimum and relatively low spreads of up to 1% crypto trades.
December 25
The Meta Quest app topped the iOS and Android app stores on Christmas Day. Based on Sensor Tower data, the app was downloaded 1.3 million times globally on both iOS and Android between December 21st and December 27th.
December 26
Chinese video streaming platform iQIYI launched the Qiyu Mix, the first headset in its new mixed reality (XR) product line. This launch follows the iQIYI Qiyu Dream Pro , the company’s third VR headset which it released in May 2022.
December 28
According to data from research firm NPD Group, sales of VR headsets in the U.S. declined 2% year-over-year through the beginning of December. NPD analyst Ben Arnold attributed some of this decline to the Meta Quest 2, which faced difficult comparables with 2021.
December 31
In his year-end annual letter, Yosuke Matsuda, President of Japanese game developer Square Enix, reinforced the company’s commitment to blockchain investments. In 2022, Square Enix partnered with NFT technology company Enjin to launch Final Fantasy NFT, and invested into play-to-earn mobile developer Gumi Games.
Crypto Corner
In December, the market capitalization of all cryptocurrencies closed at $794 billion, a decrease of $69 billion from the prior month. Year-to-date, this represents a decrease of $1.40 trillion, down 63.8% from the end of 2021.
Bitcoin
Market Cap: $318.2 billion in December, down from $329.5 billion in November
Dominance: 40.1% in December, up from 38.3% in November
Ethereum
Market Cap: $146.0 billion in December, down from $157.3 billion in November
Dominance: 18.4% in December, up from 18.3% in November
Source: CoinMarketCap, NonFungible.com. The Ball Metaverse Index does not include direct cryptocurrency exposure. Dominance refers to the share of an individual cryptocurrency’s market capitalization relative to all cryptocurrencies.
Earnings Review
December 1
Marvel Technology (MRVL) reported Q3 FY23 sales of $1.54B (consensus “cons.” $1.56B) and earnings per share of $0.57 (cons. $0.59). Management guided for midpoint revenues of $1.40B for Q4 2023 (cons. $1.61B). Shares fell by 1.5% in the following trading session, as guidance missed estimates that were already pared due to ongoing semiconductor demand weakness. CEO Matt Murphy said inventory reductions impacted “near-term results and guidance,” as chipmakers try to offload inventory that was built up during the heightened demand period following the pandemic.
December 8
Broadcom (AVGO) reported Q4 FY22 sales of $8.93B (cons. $8.91B) and earnings per share of $10.45 (cons. $10.25). Management guided for midpoint revenues of $8.90B for Q1 2023 (cons. $8.76B). Shares rose by 2.6% in the following trading session. The chipmaker’s guidance exceeded analyst expectations and was upbeat versus its peers, as it benefited from strong corporate demand. On the earnings call, CEO Hock Tan said the company’s $61 billion purchase of VMware was expected to close in fiscal 2023.
December 14
Planet Labs (PL) reported Q3 FY23 sales of $49.7MM (cons. $47.2MM) and earnings per share of -$0.15 (cons. -$0.13). Management guided for midpoint revenues of $52.0MM for Q4 2023 (cons. $51.2MM). Shares fell by 5.4% in the following trading session. Despite the initial upbeat reaction to the satellite imaging company’s guidance, the stock fell following a 3.5% decline in the Nasdaq 100 after the Fed signaled further rate hikes into 2023. Demand was driven by government and commercial spending, and Planet Labs announced new partnerships with Amazon and Accenture.
December 15
Adobe (ADBE) reported Q4 FY22 sales of $4.53B (cons. $4.53B) and earnings per share of $3.60 (cons. $3.50). Management guided for midpoint revenues of $4.62B for Q1 2023 (cons. $4.65B). Shares rose by 3.0% in the following trading session. Most analysts hiked their price targets on the software company as guidance was “better than feared.” Adobe expects to close its $20 billion acquisition of collaborative web design tool Figma, in fiscal 2023.
December 20
Nike (NKE) reported Q2 FY23 sales of $13.32B (cons. $12.58B) and earnings per share of $0.85 (cons. $0.65). Shares rose by 12.2% in the following trading session. The apparel company, which has historically derived almost a fifth of its revenue from Greater China, was expected to report lackluster results in the region, which it defied despite the “zero-Covid” policy which greatly affected consumer spending. During the quarter, Nike launched its “.SWOOSH” Web3 platform, its new hub where users can buy virtual apparel for online avatars.
Source: Bloomberg. Extraordinary items for revenue and earnings are factored out to make reported metrics comparable with Bloomberg estimates.
