The Wall Street Journal is hosting its virtual Tech Live conference with top executives, technologists and policy makers to discuss a range of issues including the lasting impact of Covid-19, as businesses grapple with disrupted supply chains, a shrinking labor force and the continuing chip shortage.
The conference launches at a time when lawmakers are re-examining big tech on issues ranging from privacy to competition. The Wall Street Journal’s investigation of
Facebook Inc.
has also led to new momentum for tougher tech laws, including special online protections for children.
Here is a rundown of interviews. Access to the conference is complimentary for Journal subscribers. You can see more details here.
First, starting at 11:15 a.m. ET,
ViacomCBS Inc.
VIAC -0.32%
Chief Executive
Robert Bakish
discusses the company’s investments in content and plans to increase global subscribers, following a recent leadership revamp at Paramount Pictures.
The conference then features conversations about the cutting edge of transportation. Grab Holdings Inc. co-founder Hooi Ling Tan will discuss plans to go public in a record-setting special-purpose acquisition and the company’s future in last-mile deliveries and financial services at 11:40 a.m. ET. Two astronauts who traveled to the edge of space with actor William Shatner will talk about their space tourism experience at 12:05 p.m. ET. Later, one of the top researchers in artificial intelligence,
Raquel Urtasun,
will speak about the future of autonomous trucking at 12:40 p.m. ET.
Investor
Alexis Ohanian
speaks at 12:15 p.m. ET on his latest venture capital endeavor, Seven Seven Six, which has focuses on founders’ well-being at a time of increased burnout and always-on work culture.
Alphabet CEO
Sundar Pichai
speaks at 2 p.m. ET on Google’s evolving workplace culture, privacy concerns and regulatory challenges, as the company battles antitrust lawsuits domestically and a $5 billion antitrust fine in Europe. Then, Reddit CEO
Steve Huffman
will discuss the social media platform’s global expansion, as the popularity of “meme stocks” helped to catapult the platform to a $10 billion valuation.
Alphabet CEO Sundar Pichai in Switzerland last year.
Online educator Sal Khan talks about the future of virtual learning at 3:15 p.m. ET, followed by Cameo CEO Steven Galanis, who will speak about the growing opportunities for content creators to monetize their fan bases.
Arm Holdings CEO
Simon Segars
speaks at 4:35 p.m. ET about the continuing chip supply issues, in light of companies like
Apple Inc.
designing their own microchips. Following that, Xbox head
Phil Spencer
will speak about cloud gaming and the future of the console.
At 5:30 p.m. ET, the day concludes with basketball star and Los Angeles Lakers forward Carmelo Anthony who will speak about his tech investments, including his investment with Overtime Sports Inc.
status as Wall Street’s hottest fund manager since Peter Lynch or Bill Gross.
Now, those gambits threaten to make ARK a high-profile casualty of the recent shift in investor sentiment away from tech stocks and toward cyclical shares tied to an economic upswing.
ARK runs five exchange-traded funds that actively invest in companies Ms. Wood and her team of portfolio managers believe will change the world through what they call “disruptive innovation.” Among the ETFs’ biggest holdings are electric car maker
Tesla Inc.,
payments company
Square Inc.
and streaming media firm
Roku Inc.
The stock prices of those three companies have surged at least 195% in the year since the Covid-19 pandemic upended the investing landscape—helping ARK’s funds more than double over the same period. But the stocks dropped more than 12% last week amid a broader selloff in fast-growing tech stocks, a slump many attribute to a sharp rise in government bond yields.
They have badly underperformed the tech-heavy Nasdaq Composite Index, which dropped 4.9% last week.
Worries about a rising interest-rate environment have posed a test for ARK, exposing the vulnerabilities of its investment approach. Higher yields generally make growth stocks, including shares of big tech companies, less attractive. Plus, some of ARK’s positions are in small, illiquid stocks that have the potential to swing dramatically.
The ETFs suffered double-digit percentage decreases last week, their biggest routs since the stock market’s plunge last March, according to FactSet. Further declines among growth stocks on Tuesday and Wednesday drove even deeper drops among ARK’s funds, bringing the declines for its flagship ARK Innovation ETF to 14% over the past month.
The cascade of red has proved hard for many investors to stomach. ARK’s funds collectively lost more than $1.8 billion between Feb. 24 and Monday, their biggest stretch of outflows ever, according to FactSet. Together, they managed roughly $51 billion at the end of February, making ARK the ninth-largest ETF operator. That’s after attracting $36.5 billion in assets over the past year, more than
Invesco Ltd.
,
Charles Schwab Corp.
and First Trust—the fourth, fifth and sixth biggest ETF issuers in the U.S., according to Morningstar Direct.
But the recent outflows triggered sales across ARK’s funds to meet redemptions, while the firm also opted to dump shares of its easier-to-trade holdings, including
Apple Inc.
and
Snap Inc.,
to load up on favorites like Tesla.
With tech stocks continuing to fall, ETF analysts and traders worry that a combination of broad market declines and additional outflows could create a snowball effect across ARK’s portfolio. That could potentially cause some of its more illiquid, small-cap holdings to trade sharply lower.
Tom Staudt, ARK’s chief operating officer, dismissed concerns of any liquidity problems and said ARK’s ETFs have continued to perform as any other ETF would during the tumult.
Still, it has been a rough patch for ARK and its star stock picker, Ms. Wood.
“What a crazy week or two we’ve had here,” Ms. Wood said in a YouTube video posted Friday that was viewed by nearly 600,000 people.
Ms. Wood founded ARK in 2014 and now serves as its chief executive and chief investment officer following a 12-year stint at AllianceBernstein. Her funds’ eye-catching performance, coupled with her willingness to engage investors through social media, podcasts and videos, has earned her a variety of endearing monikers from individual investors and Reddit’s day traders, including “Mamma Cathie,” “Aunt Cathie” and, in South Korea, “Money Tree.”
“ARK’s funds fit 2020’s narrative of secular growth, but we’re now seeing a shift in that,” said Steven DeSanctis, an equities analyst at Jefferies. “It probably won’t be the last time in the near term she sees outflows,” Mr. DeSanctis added, referring to Ms. Wood.
Outside of last week’s pullback, ARK’s returns have been the envy of the asset-management industry, reviving some investors’ belief in stock pickers after more than a decade of dominance by index-tracking funds. The ARK Innovation ETF has logged an average annual return of 36% since it started trading in 2014. That compares with the S&P 500’s average return of 11% over the past 10 years.
“There’s been lots of calls with clients over the last six months as the funds gained assets, and the primary conversation has been about what happens when the funds are no longer a hot topic,” said William Kartholl, director and head of ETF trading at Cowen.
Mr. Staudt said ARK has a soft limit of about 10% on any one stock within its funds. Tesla’s stock sits at that level in ARK’s innovation and autonomous funds, as does Square in ARK’s fintech innovation pool. As for ARK’s exposure to smaller stocks, Mr. Staudt said those worries are overblown and pointed to the fact that about 15% of ARK’s innovation fund is invested in stocks with market caps below $5 billion.
If anything, the volatility has created “attractive buying opportunities” for ARK, Mr. Staudt added.
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ARK loaded up on more shares of Tesla,
Teladoc Health Inc.
and Square during last week’s selloff, according to ARK’s daily trading logs. It also added more shares of
Zoom Video Communications Inc.
to one of its funds earlier this week.
Amid the redemptions across ARK’s funds, the firm also sold shares in some of its more widely traded liquid stocks. The firm cut its positions in Apple and Snap last week and sold all its remaining shares in
Salesforce.com Inc.,
he added. ARK also sold shares of
Facebook Inc.,
Bristol-Myers Squibb Co. and
Roche Holding AG
this week.
“It’s almost like having dry powder in the portfolio,” said Mr. Staudt, referring to how the funds basically build up a cash-like reserve to buy other stocks.
Not all investors are fazed by ARK’s bigfooted approach to investing. Flows into ARK’s innovation fund turned positive Tuesday, pulling in $464.3 million, according to FactSet.
But ARK’s most recent stumble continued to shake out others.
Paolo Campisi, a 31-year-old entrepreneur in Toronto, bought shares of ARK’s innovation fund in early February but sold his stake last week after shares dropped more than 10%. He decided to take a riskier bet on an eventual rebound by buying out-of-the money call options that expire at the end of the month. But he sold those options as well Wednesday when ARK’s flagship fund fell an additional 6.3%.
“I think everyone’s going to be challenged moving forward,” Mr. Campisi said, adding that he is unsure at what level he’d consider buying back into the fund again. “And the level of scrutiny on someone like Cathie [Wood] is going to be high.”
What You Need to Know About Investing
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
battle with publishers and regulators around the world over how the social-media giant handles news is far from finished after striking an agreement this week with the Australian government to pay for content.
The agreement Facebook reached Tuesday with Australia’s government to restore news content to its platform comes as political leaders elsewhere have pledged to increase scrutiny on tech giants, and as news outlets also plan to amp up pressure on the company to cut deals. The matter also raises questions about which publishers should get paid for news content and how much.
Facebook’s deal with Australia gives it a path to avoid required payments to publishers for news content, so long as the company works toward reaching agreements with publishers on its own accord.
“We appreciate the government has created flexibility to move forward making deals with publishers, while giving us 30 days’ notice before a designation,” said
Campbell Brown,
Facebook’s vice president of global news partnerships. If Facebook’s negotiations with individual Australian publishers fail to satisfy the government, the company could reimpose its news ban rather than be forced to comply with the new law’s terms for setting payments.
“I am hopeful there will not be a need for that step,” Ms. Brown said.
The compromise as envisioned would be an alternative to the voluntary payments that Facebook has made to “partner” news outlets for its News Tab product for mobile users in the U.S. and other countries.
The payments Facebook has made to date aren’t overly costly for the company, whose ad business drove it to a record $86 billion in revenue last year. News content accounts for only 4% of what people see in their main newsfeed, Facebook said when it announced that it would remove news from the platform in Australia last week.
Facebook blocked people in Australia from viewing or sharing news articles as lawmakers debated a bill to compel social-media companies to pay for content. The legislation is being watched globally and could offer a model for other countries. Photo: Josh Edelson/Getty Images
News publishers rely on the audience that Facebook and
Alphabet Inc.’s
Google deliver. In the hours after Facebook’s decision to shut off news sharing in Australia, news publishers in the country saw traffic from readers outside Australia decrease by about 20%, data from analytics firm Chartbeat showed.
Roughly 36% of Americans get their news from Facebook, according to a fall 2020 study from Pew Research, compared with 23% who get it from Alphabet’s YouTube and 15% from
Twitter.
If Facebook were to have to pay for news content on a global basis, the cost would be significant, said Cascend Securities analyst
Eric Ross.
“Margins disappear when you have to all of a sudden pay for things that were free,” he said.
“
There is finally a much greater appreciation of the value of credible journalism. ”
— USA Today Publisher Maribel Perez Wadsworth
The brouhaha between Facebook and Australia’s news providers comes as it and Google face antitrust lawsuits in the U.S. and regulatory scrutiny elsewhere. Australia and other countries seeking payment for news content on behalf of publishers argue that Facebook is abusing its market power by trying to minimize or avoid such expenses. A 2019 Australian report deemed the large platforms threatened upstart social-media companies as well as advertisers and the news industry at large.
Both Facebook and Google say that their platforms help journalism. As Facebook itself has noted, publishers world-wide already seek to maximize the attention their work receives on social media without any promise of compensation.
One U.S. news publisher said the Facebook dispute in Australia suggested the social-media company has renewed interest in paying publishers after being previously reluctant to do so.
“We’re at a tipping point,” said
Maribel Perez Wadsworth,
publisher of USA Today, the flagship title of
Gannett Co.
, the largest newspaper chain in the U.S. “There is finally a much greater appreciation of the value of credible journalism.”
USA Today participates in the Facebook news tab offering in the U.S. via a licensing agreement.
News Corp,
owner of The Wall Street Journal, has a commercial agreement to supply news through Facebook. Last week the company reached a three-year deal with Google to license content from its publication and produce new products for Google platforms.
Australia’s efforts could prompt nontraditional media, such as independent journalists who publish articles on writing platforms like Medium, to demand payments, said Bernstein analyst
Mark Shmulik.
“The concern is, what if we no longer draw a line at media conglomerates? … That’s a pathway Facebook doesn’t want to go down,” he said.
Earlier this month Australian officials talked with their counterparts from Canada, Germany, France and Finland about those countries making similar rules on tech platforms paying news publishers, said
Steven Guilbeault,
Canada’s minister in charge of cultural policy, adding that the coalition of countries could expand over time.
Mr. Guilbeault said he’s encouraged by developments in Australia, and intends to introduce measures this spring that have the support of its global allies and relevant stakeholders. On Monday Canadian Prime Minister
Justin Trudeau
spoke with his Australian counterpart,
Scott Morrison,
about potential cooperation in pursuing regulation of online platforms, according to a summary of the conversation released by Mr. Trudeau’s office.
”We need to find a solution that is sustainable for news publishers, small and large, digital platforms, and for the health of our democracy,” Mr. Guilbeault said.
The battle over payments to news outlets has simmered—and at times boiled over—in Europe for more than a decade. A new European Union copyright law passed in 2019 and the involvement of antitrust regulators have given news media fresh leverage by, among other things, creating new copyright control for press outlets over the use of their publications on the internet by tech companies, except in the case of very short extracts and hyperlinks.
In France, the only country that so far has so far implemented the EU law, Google last November signed licensing agreements for its News Showcase product with several publications, including Le Monde. The agreements came after a French court reaffirmed an order from the country’s antitrust regulator that Google must negotiate.
Google said it has signed News Showcase deals with more than 500 publications in a dozen countries, including Germany, the U.K. and Australia. Google last October pledged $1 billion over three years to such licensing deals, but declined to say Tuesday how much of that amount has been spent.
“We have hundreds of partnerships with news publishers large and small, making us one of the biggest funders of journalism,” a Google spokeswoman said.
Facebook said that publications’ posting of their articles to its platform constitutes a license under the French law, and remains unchanged. The company currently only shows links, rather than rich previews, when users post news articles from French publications themselves, unless the publication has given Facebook explicit permission.
A Facebook spokesman said the company is in talks in France and Germany to launch its Facebook News product, which pays to license articles from news outlets. The product launched last month in the U.K. with articles from publications including the Guardian.
Facebook has previously said it provided hundreds of millions of dollars to publications through its various tools for advertising and subscriptions.
—Sam Schechner and Paul Vieira contributed to this article.
Write to Jeff Horwitz at Jeff.Horwitz@wsj.com and Sarah E. Needleman at sarah.needleman@wsj.com
Corrections & Amplifications Facebook generated a record $86 billion in revenue last year. An earlier version of this article incorrectly said Facebook generated $70.7 billion in revenue. (Corrected on Feb. 23)