Newly Launched 'PUNK' Times Meta’s Meltdown

February 03, 2022

Subversive Capital made a bold bet with its first ETF by betting against Mark Zuckerberg’s efforts to turn his social media company into the dominant force of the metaverse.

In the short term, the bet has paid off.

The Subversive Metaverse ETF (PUNK) launched last Thursay, carrying a position of 40 shares of the company now known as Meta Platforms short. A week later, Meta reported its first decline in daily active users in North America, from 196 million to 195 million. It also reported a loss of almost $10.2 billion for the year in its business division focused on metaverse development, and lowered its forward growth expectations.

The result was an immediate nosedive of 20% after hours, which continued into Thursday’s trading session to send the company’s stock down as low as 26.5% and erasing more than $200 billion in market capitalization in a matter of hours.

In an interview Thursday, Subversive Capital Chief Investment Officer Michael Auerbach said the fund’s short position hasn’t been closed out amid the deep drop in Meta’s stock price, and will remain open indefinitely.

He believes Wednesday’s results will be the first in a string of quarters where Meta will report fewer daily users on Facebook, and he expects that the controversies that have embroiled the company for years will ward off those interested in the promise of the immersive metaverse.

“People don't want to have more immersive experiences based on the Meta platform,” he said. “It's not something that we believe the majority of users that have their own digital life want to place their trust in.”

It’s the second time in as many months that Meta has inadvertently given a boost to a small thematic ETF issuer. The Roundhill Ball Metaverse ETF (METV) launched in late June last year with the ticker "META," and was struggling to garner interest until Facebook announced its rebranding.

That original ticker drew hundreds of millions worth of inflows along a rush of interest in the metaverse, and Roundhill Investments likely benefitted further, as Meta Platforms confirmed that it acquired the rights to the symbol in its earnings statement.

Meta and Roundhill have not disclosed the terms of that transaction, but the Facebook owner previously paid South Dakota-based Meta Financial Group $60 million for the naming rights.

 

Contact Dan Mika at [email protected], and follow him on Twitter

Find your next ETF

Reset All