I hate to say 'I told you so,' but I was right about cryptocurrency | David Moon

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FTX spokesperson Kevin O’Leary grilled on crypto exchange collapse

Republican Senator Pat Toomey grilled the FTX spokesperson Kevin O’Leary on the recent collapse of the crypto exchange.

Anthony Jackson, Associated Press

It is seldom healthy to say, “I told you so,” but sometimes the temptation is too great.

A year ago I compared the valueless techno-firms burning through investor money on Super Bowl cryptocurrency ads with the almost identical phenomenon 22 years earlier with the 2000 Super Bowl dot-com ads. Although the similarities were impossible to overlook, I didn’t expect the crypto world to crumble so quickly.

Perhaps I should have; the dot-com Super Bowl ad-buying binge in January 2000 marked almost the peak of the tech-heavy Nasdaq Composite. It would be 15 years before that tech-heavy stock index recovered the loss.

The highest-profile loss from among last year’s Super Bowl crypto advertisers was Sam Bankman-Fried’s FTX, along with its related businesses and its own sponsored cryptocurrency (FTT, -96% since Super Bowl ad.) FTX managed to go from Super Bowl commercial featuring Larry David to bankrupt in only nine months.

The stock price of Coinbase, another 2022 Super Bowl crypto advertiser, has dropped 65% since last year’s big game. At least Coinbase has publicly-listed stock. Another of last year’s Super Bowl crypto advertisers, eToro, has been denied listing by the Securities and Exchange Commission. Matt Damon-endorsed Crypto.com still has its name on the L.A. Lakers arena but has cut more than half its workforce since dropping more than $100 million on ad campaigns, including $6.5 million on last year’s Super Bowl ad – a spot that didn’t even mention the name of the company.

Honorable mention from last year’s Super Bowl goes to Carvana, whose stock is off 95% from a year ago.

The millions of dollars of hubris and ego wasted on last year’s ads was the tip of the iceberg of crypto losses in 2022, as investors have suffered more than $2 trillion in crypto-related losses in a matter of months. As I wrote a year ago, the 2022 ads were eerily reminiscent of the 17 dot-com company ads in the 2000 Super Bowl, just weeks before the bursting of the dot-com bubble. The 2000 advertisers, just like the 2022 crypto companies, promised disruption and innovation. Critics (both in 2000 and 2022) were dismissed as stale, establishment types who weren’t creative enough to see the future.

Perhaps I couldn’t see the future, but I could see the financial statements. Both the 2000 and 2023 tech ads were purchased with investor capital – because none of those businesses had actual operating income.

There is no unique theme among this year’s Super Bowl advertisers. As is usual, most of the ads are for beer, liquor, snack foods and sports gambling.

Some people watch the Super Bowls primarily for the commercials. Just don’t watch the commercials for investment advice. Or nutritional guidance.

David Moon, president of Moon Capital Management, may be reached at david@mooncap.com.