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It's Sunday, June 16, 2019. Please enjoy ARK's weekly newsletter curated by our thematic analysts and designed to keep you engaged with disruptive innovation.

Jumping Genes Are a Major Addition to the Gene-Editing Toolkit

Follow Simon on Twitter @sbarnettARK


A recent Nature publication showcased how gene editing tools can be improved with unique pieces of genetic machinery called transposons—or jumping genes. CRISPR-Cas complexes modified with jumping genes should be able to overcome several challenges endemic to gene editing. CRISPR can be ineffective, for example, when researchers are editing non-dividing cells. In addition, large DNA sequences that bookend the therapeutic gene can impede drug delivery. Finally, CRISPR causes double-stranded DNA breaks that can be difficult for a cell to repair (as shown below in column ‘A’).


Jumping genes are small DNA fragments that copy and paste in the genomes of micro-organisms. As a result, bacteria can evolve rapidly in response to environmental changes. Meanwhile, viruses can harness jumping genes to attack bacteria. As detailed in the Nature publication, a research team from Columbia University noted that viral jumping genes sometimes associate with a molecule similar to CRISPR, known as Cascade.


While Cascade can integrate DNA into the genome and attack viruses, unlike CRISPR Cascade cannot cut DNA or guide the complex to a specific site. With some modification, however, CRISPR can augment Cascade to edit genes more effectively than either can alone. Cascade can be reprogrammed to guide and insert DNA alongside CRISPR without flanking DNA sequences or DNA breaks. Cascade also can edit non-dividing cells, as shown below in column ‘B. If CRISPR-Cascade demonstrates efficacy in humans, both delivering large therapeutic agents and avoiding immune reactions, it could be an extremely important addition to the gene editing toolkit.



ARK Focused on Top Takeaways from Mary Meeker’s Internet Trends Report

Follow James on Twitter @jwangARK


Mary Meeker’s epic 334 slide internet trends report is out with plenty of interesting insights. Here are ten stats that caught our eye:

  1. After more than a decade during which the share of ad dollars allocated to mobile trailed its usage, the gap has closed. Now that each approximates 33%, mobile ad sales probably will increase concomitantly with usage.
  2. E-commerce continues to increase in the US, hitting 15% of retail sales in 2018.
  3. Podcasts are blowing up— in 2018, 70 million Americans listened to podcasts, more than triple from 22 million a decade ago.
  4. While declining at Facebook and WeChat, usage is increasing at YouTube and Instagram. YouTube probably will eclipse Facebook in daily usage in the not too distant future.
  5. People care less about privacy today than they did five years ago. The percent of people who say they care about internet privacy dropped from 64% in 2014 to 52% today.
  6. The percent of encrypted web traffic increased from 53% in 2016 to 87% in 2019.
  7. The workplace continues to distribute: the percentage of US workers working remotely increased from 3% in 2000 to 5% in 2017.
  8. Participation in online courses like 2U and Coursera continues to climb. While only 4% of students complete unpaid courses like Cousera, 50% complete paid courses like 2U.
  9. Last year, China’s mobile data consumption almost tripled, thanks to short video platforms like TikTok and Kuaishou.
  10. In 2018, roughly 10 million people participated in genomics tests, a phenomenal leap from nearly zero in 2012.


Facebook Discloses Its GlobalCoin Partners 

Follow Yassine on Twitter @yassineARK


This week, Facebook disclosed more about its plans to launch a cryptocurrency early next year. As presented in ARK Disrupt Issue 174, Facebook’s cryptocurrency seems likely to be a stable coin pegged to a basket of fiat currencies. With more than 30 partners, Facebook set up the Libra Foundation to govern its cyptocurrency. Courtesy of The Block, the graphic below shows Facebook’s partners, broken out by industry.

Among its partners are payment companies like PayPal, MasterCard, Visa, Stripe, and Visa, ridesharing companies like Uber and Lyft, and venture capital firms like Andreessen Horowitz and Union Square Ventures. Apparently, each of these partners has invested approximately $10 million to create the coin.


Stay tuned for ARK's analysis of Facebook's white paper on GlobalCoin.



Face Recognition Payments in China Are Burgeoning

Follow Max on Twitter @mfriedrichARK 


Face recognition payments are burgeoning in China, as recently reported by the WSJ. The shift from QR codes to face scanners is evolving rapidly but is unlikely to harm Alipay’s and WeChat Pay’s quasi-duopoly over China’s digital payments.


Alipay has been pushing face recognition payments for some time, showcasing its “Smile to Pay” facial payment application as far back as in 2015. In 2017, Alipay rolled out facial payments at Chinese KFC restaurants.


During the past few years, QR codes have catapulted China into cashless payments thanks to the low adoption costs for merchants. As shown in the chart below, printed or static QR codes cost merchants virtually nothing other than the paper to print them, though customers need to scan the codes. Dynamic QR codes - those displayed on customers’ smartphones and then scanned by merchants with POS devices – cost only $10 and $57, as shown below.

Screen Shot 2019-06-16 at 10.28.03 AM

That said, QR codes probably are on their way out. Last year, apparently for security reasons, the Chinese government capped the maximum spending with static QR codes to 500RMB ($78) per payment app and user per day.


The cost of face recognition payment devices is declining rapidly. In April, Alipay announced a $448 million campaign offering merchants Alipay’s Dragonfly 2 face scanners for free given minimum transaction volumes, all the more attractive because they automate the checkout process and replace cashiers with self-service systems. Alipay’s Dragonfly 1, released in December 2018, was 80% cheaper than other self-service systems. One supermarket chain said that Dragonfly 1 increased the efficiency of its checkouts by 50% because one cashier was able to handle up to three facial recognition point of sale (POS) machines, saving it $2 million per year.


Given its nation-wide video surveillance and social-credit system, China should be supportive of Alipay’s push into facial recognition payments. Alipay’s parent company, Ant Financial, invested in SenseTime, one of eight companies involved in a pilot of the social-credit system.


The push toward facial recognition payments is unlikely to end the dominance of Alipay and WeChat Pay in China. All virtual transactions still happen inside the Alipay and WeChat Pay wallets, including face-based scanning transactions. Alipay and WeChat Pay could benefit from biometrics if the Chinese government requires more transactions to be completed with face scanners.


Aurora Scraps One Autonomous Partnership and Inks Two More 

Follow Tasha on Twitter @TashaARK


Aurora, the self-driving startup run by Chris Urmson, former head of Google’s car project, and Sterling Anderson, former head of Tesla’s Autopilot, made headlines several times this week. First, VW ended its partnership with Aurora because, according to several sources, of its “underwhelming” technology. At the same time, Hyundai increased its investment and Fiat expanded its partnership, aiming to integrate Aurora’s autonomous technology, including LiDAR, into commercial vans and trucks.


Aurora is one of the more notable private companies in the autonomous vehicle space worth following. Time will tell whether its technology roadmap rivals Tesla’s.


Put In Perspective, Tesla More Than Holds Its Own in the Electric Vehicle Market

Follow Sam on Twitter @skorusARK


Based on consensus forecasts,[1] the electric vehicle[2] (EV) market generally and Tesla specifically are performing well ahead of consensus expectations. In traditional s-curve adoption cycles, growth rates decline as demand scales. Yet, as shown below, electric vehicle (EV) growth has accelerated during the past five years, suggesting that lower prices are expanding the market.


ARK finds it difficult to believe that the consensus expectation for EV sales in 2023 is 4-4.5 million units, suggesting that growth will decelerate from 79% last year, as shown below, to 25% at an average annual rate during the next five years. At 26 million units, ARK’s forecast for EV sales in 2023 is roughly six-fold higher than the consensus estimate.

Screen Shot 2019-06-16 at 10.37.48 AM

Typically, as the number of competitors increases in an emerging market, companies can sustain rapid growth and lose share at the same time. Remarkedly, as shown below, the EV market has grown more than 11-fold since 2013 and yet Tesla has maintained its market share.

Screen Shot 2019-06-16 at 10.41.39 AM

ARK assumes that Tesla will lose two thirds of its market share in our bear case and one third of its market share in our bull case. Apple experienced a similar dynamic with the launch of the iPhone. Even though it lost share in every year, annual unit sales exploded to more than 200 million units,[3] providing Apple with the lion’s share of the profits in the smartphone industry. ARK’s research suggests that thanks to its battery and artificial intelligence chip technologies, not to mention its data advantage, Tesla is taking an important leaf from Apple’s book.



[1] Bloomberg New Energy Finance, Energy Information Administration, ARK Big Ideas 2019

[2] ARK considers EVs to be battery electric only.

[3] IDC reports



ARK's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.



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