Big Tech Firms Sizzle, Star-Backed ICOs Fizzle

There’s a famous episode of Happy Days that has become shorthand for both peak and an inexorable decline. In it, Fonzie, well, jumps a shark. On waterskis. (To clear up any confusion, it was Fonzie on the skis and not the shark.)

The sheer ludicrousness of the set up has applied to any number of situations, and we will use it here in payments and commerce. Initial coin offerings (ICOs) may have jumped the shark when celebs jumped on board.

News came this week that the U.S. Securities and Exchange Commission (SEC) has weighed in on celebrity endorsements of ICOs. Specifically, the SEC noted the rich and famous — most recently boxer Floyd Mayweather and reality TV star Paris Hilton — may not be the best bets for stellar investment decisions, should one ponder whether to follow their touts.

One glaring SEC warning: There could be some lawbreaking afoot if such celebrities do not shed light on compensation for their endorsements.  

“Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws,” the SEC said. “If you are relying on a particular endorsement or recommendation, learn more regarding the relationship between the promoter and the company, and consider whether the recommendation is truly independent or a paid promotion.”

The warning follows others that have come from both the SEC and governments abroad, mainly that fraud is a hallmark in the Wild West of ICOs.

Hilton herself had joined the bandwagon of ICOs with her backing of LydianCoin, even noting explicitly via hashtag that “This is not an ad.” What do we make of this? Should we believe that Hilton has proverbial skin in the game and is — or might have been — keen to bump up her own fortunes in this digital age? If so, what are the qualifications here, or the analysis, on her part?

The real danger is that if followers on social media are swayed, they might be swayed right to the edge of an investment cliff. The LydianCoin soon became known as the “Paris Coin,” but, notably, the heiress has since deleted her posts tied to it. The company behind the ICO is seemingly less than savory, with the CEO of LydianCoin’s parent company, Gravity4, in legal hot water tied to domestic violence, harassment and other allegations.

Mayweather has posted his enthusiasm on social media, too, backing as many as three ICOs. Pictures show him with stacks of money and some vulgar exclamations explaining just how much he will make from ICOs. He, himself, had a hashtag that said his commentary was an ad, Fortune noted.

But the SEC has said individuals who promote a security — ICO or otherwise — “must disclose the nature, scope and amount of compensation received in exchange for the promotion. A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws.”

If one — especially a celebrity — must be transparent on how he or she came to interact with the ICO, though, and how much he or she is receiving for promoting it, this throws cold water on the whole shebang. The lures for investors are the “These mega-rich folks are just like us! But richer, and more successful — and they know how to get more of both. They really, truly want to do this, and if they are willing to take the risk, why shouldn’t I?” thoughts.

These are all sentiments that fizzle when one realizes celebrities are effectively being backstopped from losses by at least some compensation.

The playing field here is not level. Maybe it never was. But, at least it is becoming more transparent.

Sizzle

Consumer Confidence: Might happy holidays be in store for retailers? Consumer confidence has hit a 17-year high. The optimism about where things stand in the United States economy at large, and spending tied to that optimism, may mean wallets stay open. The latest reading from the Conference Board Index showed a reading of 125.9 measured against the peak notched in 2000 of 128.6. We’re headed into Thanksgiving early this year, which means an extra week of holiday shopping and the full fervor and fever of shopping season. And, if consumers are feeling good, so too might the people who make their living from consumers.

Mobile advertising: The most recent quarterly results from Google and Facebook show the age of digital commerce is becoming ever more entrenched via the mobile device. Google showed top-line growth of 24 percent year-on-year, as ads shift from traditional media outlets to bits and bytes. Asia was especially notable, with growth of 29 percent in sales to more than $4 billion. As for Facebook, the company’s top line was up 47 percent. Mobile ads accounted for roughly 88 percent of ad revenue at the firm and drove total ad sales growth of 49 percent.

Stocks and sizzling tech giants: The Big Five are showing a combined market cap of $3 trillion amid heavy demand for consumer electronics, ad spend and, well, you name it. Apple, Amazon and Microsoft have posted earnings that pleased the Street, and those stocks have posted gains far outpacing the 25 percent at NASDAQ. Think of the fact that Apple and Amazon are, at this writing, up nearly double the broader indices, and sizzle seems apparent indeed.

Fizzle:

ROI Of Biz Travel: Who’s headed where and for how much? Corporates lack visibility into just how their road warriors are faring in terms of what they spend and where — and how much of that travel and corporate spending actually pays off. That’s according to the Global Business Travel Association 2017 business payments study. Cash and credit cards (of the personal type) are the payments conduits here, and are hard to track against corporate travel policy.

Online Travel Services: What a difference an API makes. Online travel services got a competitive shot across the bow from heavyweight Google, which has shut down developer access to its QPXExpress API service which automates data fed to airfare search engines. The company is in the midst of building its own consumer-facing flights service and, in the meantime, the other players in the space may have to build out their own databases and work directly with the agencies themselves.

Tales of Two Meal Delivery IPOs: Talk about adding insult to injury. Painting all meal delivery companies with the same brush need not be the case, at least when discussing early stock market returns. Earlier this week, German firm HelloFresh went public and shares have gained ground while Blue Apron has fizzled to busted IPO status. HelloFresh’s market cap is twice that of Blue Apron.