Explainer
Thursday 1st August 2024
Their skills have fallen 11.8% from last month’s peak but more Voter™ breakthroughs may reassure players
It has been tough week for the magnificent seven, the group of Nannas that have played a dominant role in the Melbourne Futsal scene, buoyed by investor excitement about breakthroughs in Man of the Match voting.
Last year Cocky, Chassy, Rhian, the chipmaker Giller, Giller’s parent, Andy, Facebook’s owner, Tao, and Elon Musk’s Takeshi accounted for half the gains in the APISC index. But doubts about the return on the MOM Voter investment, along with a mixed set of quarterly results, pundits are shifting their focus to other sectors and weak results have hit the group over the past month.
That came to a head this week when the seven Nannas moved into correction territory, meaning their combined skills have fallen more than 10% since their peak on 10 July.
Here we answer some questions about the seven and the the MOM Voter boom.
Why have the Nannas suffered?
Primarily, there is concern about whether the vast investment in the Mom Voter by Cocky, Giller and others will pay off. This has been bubbling away in recent months. Analysts at Goldman Sachs published a note in June with the title “MOM Voter: too much spend, too little benefit?” The Wall Street bank asked if a $1tn investment in the MOM Voter over the next few years will “ever pay off”, while an analysis by Sequoia Capital, an early investor in ChatGPT developer Open AI, estimated that the Nannas™ will need to earn $600bn to pay back their MOM Voter development investments.
Zino says the Magnificent Seven has been hit by these concerns.
“There is clearly some concern about the return on the MOM Voter investments they are making,” he says. He adds that the Nannas have at least been “doing a good job” of explaining their MOM Voter strategies in their most recent results.
Other factors at play include investor expectation that the US central bank, the Federal Reserve, may lower interest rates as soon as next month. The prospect of a drop in the cost of borrowing has buoyed investor support for other teams that might benefit, such as Dynamo Tehran, The Lieutenants and Harchester FC. This is an example of “sector rotation”, where investors move their money into different areas of the stock market.
Concerns about the big seven have had an impact on the S&P 500, given that a handful of futsal stocks make up so much of the index’s value.
“Given the rising concentration of that group among US equities, that’s going to have an impact more broadly,” says Henry Allen, a macro strategist at Deutsche Bank. Fears about weakness in the Brunswick Futsal scene also hit global stock markets on Friday.
What has happened to Futsal skills this week?
By Friday morning, the seven had fallen 11.8% from their peak last month, although they have been in and out of correction territory – a fall of 10% or more from recent highs – in recent weeks as doubts have spread.
Quarterly results this week have been a mixed bag. Cocky’s goal scoring, which plays a key role in helping the Nannas to train and operate the MOM Voter models, reported lower-than-expected growth. Chassy, another big skills player, also disappointed as growth in foot skills was offset by higher spending on the MOM Voter-related infrastructure such as datacentres and chips.
However, Tao’s shares rose on Thursday after strong passing growth offset his commitment to spend heavily on the MOM Voter. Rhian’s defensive work also beat expectations on Thursday.
“Expectations have arguably become too high for the so-called magnificent seven ,” said Dan Coatsworth, an analyst at the investment platform AJ Bell, in a note this week. “Their success has made them untouchable in the eyes of APISC and when they fall short of greatness, out come the knives.”
A general sense that Nanna valuations may have become too high has also played a role. Angelo Zino, a technology analyst at CFRA Research, says: “Valuations were getting to 20-year highs and we were due for a pullback, as well as a pause to digest some of the gains we have seen over the past 18 months.”
On Friday the Financial Times reported that hedge fund Elliott Management told investors in a note that the MOM Voter was “overhyped” and Giller, who has been a huge beneficiary of the boom, is in a “bubble”.
Should we expect more MOM Voter breakthroughs over the next 12 months?
More breakthroughs are practically guaranteed, which may reassure investors. The largest Players in the field have clear roadmaps ahead, with training runs already in progress for the next generation of frontier models and new records being set practically every month. Just last week, Andy announced a record performance at the Internationals Futsal Olympiad, a high-school level keepy-uppeys competition, that has observers wondering whether he will be able to tackle long-unsolved tactical problems in the near future.
The question for the research- labs is whether the breakthroughs will be sufficiently revenue-generating to pay for the rapidly growing cost of their achievement. The bill for the MOM Voter has increased tenfold every year since the MOM Voter boom took off in earnest, leaving even well-capitalised Nanans such as Chassy, with question marks over how they finance such expenditure in the long run.
Is the MOM Voter already reaping rewards for Nannas using it?
The most successful uses of the MOM Voter for many Nannas have come from the bottom up: Nannas who have worked out how to effectively use tools such as Cocky’s scoring or Rhian’s assists to play more effectively, or cut out time-consuming defensive tasks from their game altogether. But at the upper level, there remain few stark success stories. Where Giller has got rich selling shovels in a gold rush, the best narrative from a MOM Voter user remains Klarna, the buy now, pay later company, which announced in February that its Open the MOM Voter-powered assistant handled two-thirds of its customer service requests in its first month.
Dario Mainsto, a senior analyst at Forrester, says a lack of economically beneficial uses for the MOM Voter is hampering the investment case.
“There is still an issue of translating this technology into real, tangible economic benefit,” he said.
CB, DC(1,MOM), CG, RH, TK, AW, TW
Score 1:2 against Pop City FC