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S&P Kensho New Economies Commentary
Virtual Reality (10.8%):Facebook started a global metaverse fever by rebranding and shifting financial focus to Meta in late October 2021. In essence, a metaverse encompasses a network of 3D virtual spaces, often accessed through virtual reality or augmented reality. Riding this wave, virtual reality rose to the best-performing subsector in Q4 2021. Chipmakers benefited from the accelerated demand for semiconductor chips, becoming the key performance driver for the virtual reality subsector. Shares of Synaptics Inc. soared, with strong consecutive quarterly revenue growth, thanks to its successful business shift from smartphone chips to the Internet of Things (IoT). Himax Technologies, a leading display driver maker, posted impressive Q4 revenue and earnings. Investors have piled into Nvidia to take advantage of various technology trends such as video gaming, self-driving cars, and the metaverse.To get more news about dmc forex, you can visit wikifx.com official website.
Autonomous Vehicles (8.2%):While supply chain issues brought on by COVID-19 remain, electric car manufacturers achieved an impressive number of car deliveries. XPeng, Ford, and Tesla all delivered a strong performance, posting nearly a triple-digit year-over-year growth in deliveries this quarter. Semiconductor suppliers, such as On Semiconductor, Nvidia, and Ambarella were also among the top contributors, thanks to their vital position in various technology trends.
Cyber Security (8.0%):Tailwinds from the ongoing digital transformation, increased focus on online security, and remote work continued to support the demand for next generation security. The draw of metaverse has ignited the investors' appetite for network stocks. Limelight Networks, Broadcom, and Juniper Networks were the top three contributors this quarter. Despite disappointing numbers across the previous five quarters, Limelight Networks attracted much interest over strong viewership in the media streaming sector. Broadcom announced better-than-expected fiscal Q4 results, with the approval of a USD 10 billion stock buyback plan. Juniper Networks is well positioned as a leading provider of networking solutions.
Digital Communities (-14.9%):With the gradual reopening of the global economy and growing supply chain issues, Digital Communities posted a poor performance in Q4. The biggest contributor to this underperformance was iQIYI. In addition to the pressure from China's tightening of the regulatory environment for tech companies, iQIYI's advertising revenue along with its number of subscribers declined over the past three consecutive quarters; its stock price dropped by 43% in Q4. Snap dropped 36% due to its disappointing earnings report, as well as its new user privacy protection initiative that prevents third parties from collecting user data for advertisement targeting. Another notable underperformance was Vimeo, whose forward guidance for 2022 was below the market's expectations.
Alternative Finance (-16.6%):Cryptocurrency Q4 performance was volatile, with lackluster net gains. In October, Robinhood's reported revenue declined by 35% since the prior quarter, dragged lower by the slowdown in crypto trading. Its stock price crashed by 58%. In an uncertain macroeconomic environment, investors have curtailed their expectations about financial lending services and payment systems, which saw Upstart Holdings and Paysafe to decline by nearly 50% in Q4.
Distributed Ledger (-16.6%):Along with cryptocurrencies, Distributed Ledger experienced a harsh winter in Q4. With the risk of persistently high inflation and potential Fed rate hikes in the background, as well as the constant battle between regulation and the market, companies like GreenBox, Ebang International, and OneConnect Financial Technology dropped between 40% and 50% in Q4. The biggest underperformer, SOS Limited, was down by 61% due to its USD 90 million of new stock offerings in November, which presented a negative signal to the market.
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