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Global Internet Stocks Rally on Better Earnings and Softer Inflation Data

  • Last week, the ALPS | O’Shares Global Internet Giants ETF (OGIG) rallied 13.28% as growth stocks bounced back with the US 10-year yield falling roughly 40 basis points (bps) (or 8.32%). After experiencing a large tech sell-off in the week prior following several earnings misses and lowered guidance, global internet stocks rallied strongly last week after US inflation figures for October came in slightly lower than expected, signaling a potentially less hawkish Federal Reserve (Fed) in 2023.

  • Gains in OGIG last week were broad-based across its Internet segments as global growth stocks rallied:

    • Cloud Software:
      • Internet software developer, Cloudfare Inc. (NET US, 1.23% weight*), was OGIG’s best performer last week, jumping nearly 38% as the high multiple, high growth stock got a valuation boost from its longer duration cash flow profile benefitting from falling interest rates.
      • Five9 Inc. (FIVN US, 0.73% weight*), a cloud contact center software provider, also returned 35.19% last week on falling interest rates and after analysts defended its reset 4Q guidance expectations subsequent to the stock selling off the week prior.
    • Online Media:
      • Video game software company, Unity Software Inc. (U US, 1.00% weight*), rallied over 31% last week as its acquisition of IronSource (IS, not in OGIG) was applauded by investors as it drove a large 3Q revenue increase and beat.

      • The popular streaming platform, Roku Inc. (ROKU US, 0.65% weight*), gained 21.70% last week following new coverage at Jefferies, with the analyst noting that the company has limited downside at current prices.
    • Online Services:
      • Food delivery firm, Delivery Hero SE (DHER GR, 1.35% weight*), also moved 33.53% higher last week on better-than-expected 3Q results, with analysts citing an increased earnings before interest, taxes, depreciation and amortization (EBITDA) target that puts the company on track to be free cash flow positive later next year.
      • Online recruitment servicer, Kanzhun LTD (BZ US, 0.98% weight*), and e-commerce company, JD.COM Inc. (9618 HK, 0.81% weight*), were the top performers among OGIG’s Chinese exposure last week, returning 13.38% and 8.94%, respectively, with major Chinese internet stocks rallying last Friday on the potential easing of China’s Zero-COVID-19 policies sometime next year.

“We expect a significant decline in inflation next year, with the core PCE measure falling from 5.1% currently to 2.9% by December 2023. Our forecast reflects three key factors: 1) the easing in supply chain constraints in the goods sector, 2) a peak in shelter inflation post-reopening, and 3) slower wage growth driven by the ongoing rebalancing of the labor market.”

– Jan Hatzius, Goldman Sachs Chief Equities Strategist, November 13, 2022

Disinflation and China Zero-COVID-19 Relaxation Brings New Life to Global Internet Stocks
  • Following a massive tech sell-off only a few weeks ago on weaker mega-tech earnings, last week’s softer US inflation report brought global growth and technology stocks back to life. Although many sell-side strategists remain skeptical of the tech rally last week, US Treasury yields recorded the largest one-day drop since 2008 after the inflation print, while the dollar also weakened the most since 2015 – both factors that act as tailwinds to growth assets. After weeks of hawkish comments by the Fed, it was reported by the Wall Street Journal last week that some Fed members were becoming uneasy over the speed of their recent rate hikes, further confirming the potential cooling of the Fed.

20221114-chart

  • Almost every country exposure within OGIG saw large gains last week as global markets moved higher on the back of disinflationary trends in the US. OGIG’s largest weighting by country is to the US and China, which returned 13.99% and 7.54% last week, respectively.

  • OGIG’s global exposure to quality-screened internet companies is poised to benefit from the potential 2023 setup of slowing global inflation and decreasing interest rates.

* Weight in OGIG as of 11/11/2022

Performance Summary
  1 Week YTD 1 Y 3 Y
ALPS | O’Shares Global Internet Giants ETF (OGIG) 13.28% -48.80% -55.26% 4.48%
O’Shares Global Internet Giants Index 13.29% -48.53% -55.01% 6.03%
NASDAQ 100 Index 8.84% -27.59% -26.29% 43.38%


Source: Bloomberg L.P., as of 11/11/2022

Performance data quoted represents past performance. Past performance is no guarantee of future results so that shares, when redeemed, may be worth more or less than their original cost. The investment return and principal value will fluctuate. Current performance may be higher or lower than the performance quoted. For current month-end performance call 1-866-759-5679 or visit www.alpsfunds.com. Performance includes reinvested distributions and capital gains.

For standardized performance please click here.

Performance data prior to 06/21/2022 reflects the performance of the Fund as managed under the OSI ETF Trust.

Top 10 Holdings
Microsoft Corp 6.65%   MercadoLibre Inc 1.82%
Alphabet Inc 5.65%   Shopify Inc 1.74%
Amazon.com Inc 5.40%   ServiceNow Inc 1.72%
Meituan 2.23%   Zscaler Inc 1.57%
Snowflake Inc 1.97%   Crowdstrike Holdings Inc 1.54%


As of 11/11/2022, subject to change

Important Disclosures & Definitions

An investor should consider the investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus containing this and other information, call 1-866-759-5679 or visit www.alpsfunds.com. Read the prospectus carefully before investing.

Shares are not individually redeemable. Investors buy and sell shares on a secondary market. Only market makers or “authorized participants” may trade directly with the Fund, typically in blocks of 5,000, 25,000 or 50,000 shares.

Performance data quoted represents past performance. Past performance is no guarantee of future results; current performance may be higher or lower than performance quoted.


All investments are subject to risks, including the loss of money and the possible loss of the entire principal amount invested. Additional information regarding the risks of this investment is available in the prospectus.

Effective 06/17/2022, the O’Shares Global Internet Giants ETF reorganized into the ALPS | O’Shares Global Internet Giants ETF.

Concentration in a particular industry or sector will subject the Fund to loss due to adverse occurrences that may affect that industry or sector. The Fund may use derivatives which may involve risks different from, or greater than, those associated with more traditional investments. A Fund’s emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Also, a company may reduce or eliminate its dividend after the Fund’s purchase of such a company’s securities.

Companies involved with internet technology and e-commerce are exposed to risks associated with rapid advances in technology, obsolescence of current products and services, the finite life of patents and the constant threat of global competition and substitutes.

The Fund employs a “passive management” - or indexing - investment approach and seeks investment results that correspond (before fees and expenses) generally to the performance of its underlying index. Unlike many investment companies, the Fund is not “actively” managed. Therefore, it would not necessarily sell or buy a security unless that security is removed from or added to the underlying index, respectively.

Basis Point (bps): a unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA): a measure of a company’s overall financial performance.

NASDAQ 100 Index: one of the world’s preeminent large-cap growth indexes. It includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization.

O’Shares Global Internet Giants Index: a rules-based index intended to give investors a means of tracking stocks exhibiting quality and growth characteristics in the internet technology and e-commerce business segments and pass screens for gross margin and cash burn sustainability. Companies included in OGIGX derive at least 50% of their revenues from a) internet technology companies whose principal business is to provide the technologies that support internet commerce; and b) internet commerce companies whose principal business is to sell products and services via the internet.

One may not invest directly in an index.

ALPS Advisors, Inc. and ALPS Portfolio Solutions Distributor, Inc., affiliated entities, are unaffiliated with O’Shares Investments.

ALPS Portfolio Solutions Distributor, Inc. is the distributor for the Fund.

Not FDIC Insured • No Bank Guarantee • May Lose Value

OUS000155 02/13/2023

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