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The Dow Jones Industrial Average jumped 6.2% in last week’s stock market trading. The S&P 500 index leapt 6.6%. The Nasdaq composite popped 6.8%. The small-cap Russell 2000 ran up 6.55% – a refreshing change after weeks of declines. Sand Hill Road’s doomsayer-in-chief—Sequoia Capital—is back with a warning to its startup founders: Don’t expect a recovery from the current market downturn to happen quickly. 15,000 startup employees were laid off in May. This week’s cuts bring this year’s total to over 28,000, per Layoffs.fyi, compared to about 10,000 total in 2021 and a staggering 80,000 in 2020. 25 companies that listed during the SPAC boom of 2020 and 2021 have already issued warnings that they could go bust within a year, according to a data analytics firm. These blank-check vehicles raised $96 billion in the first quarter of 2021 alone, according to the Harvard Business Review. A growing number of Chinese tech start-ups, , are willing to list shares publicly in China at valuations lower than during private funding rounds in so-called blood listings, according to Reuters. Snap’s warning sent shock across digital advertising as investors fled social media stocks. Cathie Wood’s ARK Invest bought almost US$44 million in shares of Nvidia on Thursday, after the tech company reported its first-quarter earnings. A Twitter shareholder sued Elon Musk for market manipulation. Apple could be in talks to buy EA gaming, Disney and Amazon also potential suitors. iPhone production plans said to be 20 million down on consensus expectations. Samsung will reportedly produce 30 million fewer smartphones this year.
Although the broader market has free fallen for weeks now, Canadian microcap stocks have been declining since March 2021. And while we won’t call a bottom, microcaps look VERY cheap for long-term investors. Take advantage of this time to do your research and find the winners that will come out of this downturn and provide outsized returns. Please feel free to reach out to SophicCapital if you would like to dig into our companies.

Some stats from Morning Brew put recent stock market volatility into perspective. The Dow posted its eighth straight weekly loss, which is its longest weekly losing streak since 1923. The S&P has lost ground for seven straight weeks, its longest losing streak since 2001. The Nasdaq has dropped more from its peak last November than when the world shut down in spring 2020. We repeat: The literal world shut down and the Nasdaq is doing worse now. Tiger Global, the hedge fund known for making big bets on technology companies, slashed its shareholdings and dumped stakes in companies such as Netflix and Rivian as it suffered heavy losses during this year’s stock market rout. ‘Big Short’ investor Michael Burry revealed a bet against Apple stock — and built stakes in Alphabet and Meta last quarter. Coinbase shares jumped Tuesday after the largest cryptocurrency exchange in the US said it’s pulling back the pace of hiring to strengthen its businesses during a slump in the US$1.4 trillion crypto market. Southeast Asian ride hailing and food delivery company Grab said its business is recovering as the region reopens from Covid-19 lockdowns. Cisco Systems forecasts revenue drop, blames China lockdowns. China’s Tencent reports no revenue growth for first time. Apple execs recently presented augmented reality headset to company board, suggesting product is close to launch. Facebook parent company Meta Platforms has plans to monetize WhatsApp. Your online behavior and location are shared with advertisers 747 times a day. Square to offer Afterpay’s BNPL at brick-and-mortar stores. Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker, is considering building a semiconductor factory in Singapore to help address a global supply shortage, according to people familiar with the matter. As investor conferences gradually resume in person, Sophic clients Renoworks Software (RW-TSXV), Smart Employee Benefits (SEB-TSXV), Swarmio Media (SWRM-CSE), and Edge Total Intelligence (CTRL-TSXV) attended the Planet MicroCap Showcase 2022 conference in Las Vegas recently. Sophic Client Clear Blue Technologies’ (CBLU-TSXV) CEO, was on BNN Bloomberg this week to talk about Smart Off-Grid energy Voyager Digital (VOYG-TSX) announced a common share private placement of approximately US$60 million anchored by leading crypto companies.

Other than a likely short covering rally on Friday, the pain in growth stocks continued through last week. As Shopify’s (SHOP-NYSE, SHOP-TSX) stock price continued to slide, the company’s senior executives are putting on a public display and promising to personally buy chunks of the firm’s shares on the open market. This all came a few days after a filing showed Uber CEO Khosrowshahi bought US$5 million of the company’s own beaten down stock. Uber CEO also told staff, the company will cut down on costs, treat hiring as a ‘privilege’. PopReach (POPR-TSXV) closed a US$33 million in credit facilities with Bank of Montreal. Instacart, the biggest online grocery in the U.S., has confidentially filed to go public this year, the company said, confirming an earlier report by Bloomberg. Goldman Sachs is exiting work on most SPACs because of liability concerns as regulators tighten guidelines, report says. Twitter CEO Parag Agrawal said Friday in a series of tweets that he still expected Elon Musk’s purchase of Twitter to close, “we need to be prepared for all scenarios,” explaining why he made management changes and is acting to control costs. Salesforce has sold out of the last of its shares in data-analytics software maker Snowflake, according to a regulatory filing on Friday. Salesforce, which makes investments through its Salesforce Ventures unit, still owns a stake in five public companies, including Robinhood and Monday.com, the filing shows. Tiger Global has been hit by losses of about US$17 billion during this year’s technology stock sell-off, marking one of the biggest dollar declines for a hedge fund in history. Ark Invest’s 75% decline in its flagship ETF hasn’t stopped investors from pouring US$1.3 billion in the fund in 2022. SoftBank is cutting its startup investments 50-75%. Samsung is in talks to hike chipmaking prices by up to 20%.