(Bloomberg) -- Meme stocks, blank-check companies and high-flying biotech names that were all the rage at the start of 2021 are now running cold.
The first two weeks of the year have brought a 17% tumble for a group of stocks that went public via merger with blank-check firms and a 10% correction for the biotechnology industry.
That’s a very different picture from a year ago when investors pushed easy money into the SPAC bubble or high-flying stocks backed by the portfolio of exchange-traded funds in Cathie Wood’s ARK Investment Management.
The frenzy of special-purpose acquisition companies has fizzled over the past 10 months as investors shy away from the vehicle. The De-SPAC Index, a group of 25 stocks that went public by merging with a SPAC, has slumped 17% to start the year, descending into a string of fresh record lows.
Another casualty of the market’s choppy start to 2022 are meme stocks, the group of companies which saw a parabolic rise this time last year. GameStop Corp., the stock that gripped the market, has lost more than one-fifth of its to start the year and is mired in its longest losing streak since early August.
Retail investor malaise has weighed on the broader meme stock ecosystem with a Bloomberg-tracked basket trading roughly where it was last year before the mania consumed the market.
The group of 37 stocks is down more than 7% this year, which compares with a more than 30% rally the index saw to start 2021.
A beneficiary of the surge in thematic ETFs was Wood’s suite of ARK ETFs. While its flagship ARK Innovation ETF (ARKK) rallied 14% at the start of 2021, outperforming a flat S&P 500, it has been caught in a vicious downward spiral this year. ARKK has fallen 15% to start the year with losses more than tripling the tech-heavy Nasdaq 100 Index.
Weakness is apparent in the biotechnology industry and stands out for trading of the equal-weighted SPDR S&P Biotech ETF (XBI). The ETF, which is tracked by fund specialists to measure the industry’s performance, has slumped 10% this year after its worst year ever. That rocky performance has extended into 2022 with the ETF bouncing off the lowest level since May 2020.
A lack of mergers and acquisitions and the general risk-off environment are among the factors experts blame for the latest leg lower.
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