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It's Sunday, September 1st, 2019. Please enjoy ARK's weekly newsletter curated by our thematic analysts and designed to keep you engaged with disruptive innovation.

Population Sequencing Should Enable Broad-based Access to Precision Medicine 

Follow Simon on Twitter @sbarnettARK


The promise behind precision medicine is that everyone in a population should be able to benefit from diagnostics and therapies. Treating disease with next-generation DNA sequencing (NGS) requires that an individual’s DNA be measured against a reference - a mutation-free genome. The majority of reference genomes, however, were decoded from those with European ancestry and don’t capture natural genetic differences in other lineages.


Based on a recent report, many nations are funding large-scale sequencing projects to capture the genetic heterogeneity in their populations. As a result, their healthcare systems should be able to offer more effective diagnostics and therapeutics than otherwise would be the case.


Should other nations choose to spend a percentage of their GDP on population health studies similar to the countries shown below, then the annual population sequencing market could almost triple from $1.5 billion today to roughly $4.2 billion by 2023. At a cost of $100 per genome, 42 million genomes could be sequenced globally, solely because of population sequencing projects, accounting for nearly half of the 100 million whole human sequences in our forecast for 2023. 

Screen Shot 2019-09-01 at 10.23.40 AM


The Start of Fall Semester Makes Venmo the #1 Finance App on the App Store - For One Day

Follow Max on Twitter @mfriedrichARK


Venmo, PayPal’s peer-to-peer mobile payments app, momentarily stole the top spot from Square’s Cash App on the Apple App Store’s Finance category. With the highest number of downloads, Cash App had been at the top for months and regained its spot in a few days.


Why did Venmo become so popular for a few days? Our research suggests that the number of daily Venmo signups increase significantly during the back to school season in late August and early September. College freshmen are pressured socially to download the app, parents download the app to send their children money for books or tuition, and all students start paying rent or utilities for the new semester. In the past, Venmo has capitalized on this dynamic by sponsoring college parties and this year it targeted college students with a cash back campaign on Venmo Card purchases. Invited Venmo users can apply for a Venmo debit card and earn 5% cash back on “eligible” purchases until September 30, 2019, with a maximum cash back of $15. It will “drop the cash [back] in your Venmo balance around October 15, 2019”.


Venmo’s cash back campaign is similar to Cash App’s Boost feature, which enables users to receive discounts on purchases at selected merchants. Unlike with Venmo’s cash back program, Cash App users enjoy discounts of up to 15%, instead of 5%, and receive the cash back immediately, instead of weeks later.



What Could the Spirit Airlines and WhatsApp Partnership Signal?

Follow George on Twitter @ARKInvest


Spirit Airlines announced that on September 1stits customers will be able to book and modify reservations using WhatsApp in both English and Spanish. Spirit is a low-cost international carrier offering 600 flights per day to 76 destinations in the United States, the Caribbean and Latin America. Customers will interact first with messaging bots, as shown below, then customer service agents confirming their bookings, and finally a link outside of WhatsApp to consummate transactions.




The cost to book a flight on Spirit Airlines through WhatsApp is $25. So, Spirit has discovered yet another way to squeeze money out of flights. That said, it also is tackling the problem that long waits for agents have become and giving customers the opportunity to message agents on their own time and at their convenience. Also interesting to note, Spirit charges $25 to book or modify flights over the phone.


Arguably, this service is a more interesting development for Facebook, WhatsApp’s parent, as it creates utility and value for both users and Spirit. Importantly, Facebook has the potential to monetize WhatsApp and perhaps create a digital wallet. As users contact and transact with businesses directly, the fee for such services could be sourced from balances that build up within the WhatsApp ecosystem.


We will be following WhatsApp closely to see if this customer service initiative morphs into a mobile wallet.



Can China Catch Up to the World in Semiconductors?

Follow James on Twitter @jwangARK


China consumes more than half but produces less than 5% of the world’s semiconductors. Perhaps more than any other, this statistic explains China’s obsession with becoming self-sufficient and the important role that chips are playing in the current US-China trade war.


Every decade or so, China tries to catch up in the semiconductor race with ambitious state funded plans. Historically, cultural revolutions, mismanagement, and/or a talent deficit have hindered its attempts. Now, China aims to produce domestically 40 percent of the semiconductors it consumes by 2020, and 70 percent by 2025. The state backed Integrated Circuit Industry Investment Fund (ICIIF) has raised more than $50 billion to invest in domestic and foreign semiconductor companies. Will this time be different?


Three forces are working in China’s favor this time around. First, the slowdown in Moore’s Law is giving China more time to catch up. This year, China’s SMIC fab started producing chips in the 14nm process, an important milestone. Second, Huawei has imitated Samsung successfully, both in designing its own smartphone chip and in selling its own smartphone, now with almost 20% market share worldwide. Finally, Chinese companies from Alibaba to Horizon Robotics have invested heavily in AI chips. With no IP licenses necessary and a huge domestic market, Chinese companies could capture a large portion of the emerging $40 billion AI chip market.



Bitcoin’s Realized Capitalization Has Eclipsed $100 billion

Follow Yassine on Twitter @yassineARK


This week, bitcoin’s realized capitalization surpassed $100 billion for the first time. Highlighted in a report released by Coin Metrics, realized capitalization measures the value of bitcoin on a cost basis, adding perspective to the network’s “economic weight.” While market capitalization values each coin at the market price, realized capitalization values each coin at the price at which it last moved.


A breakdown by price range of the realized cap contributions in the charts below suggests that bitcoin has more economic weight today than at its previous realized cap peak in January 2018.


Bitcoin Realized Cap

Source: Coin Metrics' State of the Network: Issue 14


In late 2017, 74% of realized cap was composed of coins above current price levels, as shown in the graph above.


Today, 52% of realized cap is composed of coins above current price levels.

Bitcoin Realized Cap 2

Source: Coin Metrics' State of the Network: Issue 14


As Coinmetrics points out, “A relatively large amount of [bitcoin] BTC ownership is now concentrated in the $3,000 to $12,000 range,…a healthier base.” The downward shift in contribution signifies that current price levels could be more sustainable, since a majority of the BTC bought above $13,000 has been sold.


The full realized capitalization report can be found here, along with a more comprehensive explanation of the metric’s significance.


Rolling Delivery Robots are Ramping

Follow Sam on Twitter @skorusARK


One year ago ARK published a piece illustrating that autonomous rolling delivery robots could lower the cost of last mile delivery from ~$1.60 today to just $0.06. The leaders in the space are Starship Technologies and Amazon, both of which are starting to scale their operations. Recently, Starship raised $40 million to expand to 100 new universities over the next two years.


For context on the speed of their ramp, Starship hit its first milestone - 10,000 deliveries - in four years, then 40,000 in eight months and another 50,000 in four months. Starship currently has a fleet of 250 robots and expects to add 25-50 robots for each university it adds. Amazon’s robots are nearly identical to Starship’s, each costing roughly $2,000. Amazon began testing its robots in January, has completed thousands of deliveries, and is expanding the tests into Southern California.


While Starship Technologies appears to be in the pole position for now, Amazon has a history of scaling quickly, starting from 1,000 Kiva warehouse robots in 2013 to more than 200,000 in 2019.



Tesla Launched Insurance, and Then Relaunched It

Follow Brett on Twitter @wintonARK


On Wednesday, Tesla announced that it would be offering a new insurance program starting in California. Roughly 17 minutes after the announcement it shut the program down, as many owners complained that the coverage was much more expensive than their existing plans.


Tesla’s response was swift. After making some ‘adjustments to its algorithm’ the program was relaunched within 24 hours. Now Tesla’s insurance program offers owners roughly a 20% discount to their existing plans.


As is the case for many electric vehicles (EVs), Teslas are expensive to insure, particularly because of higher maintenance and repair costs. Because the number of Tesla-approved body repair shops is limited, the training and equipment necessary to repair EVs are expensive.


How is Tesla able to offer such steep discounts? According to the company, “Tesla uniquely understands its vehicles, technology, safety, and repair costs, and eliminates fees taken by traditional insurance carriers.” You can also find more insights from our Director of Research here: Tesla Insurance.


While Tesla’s launch into insurance wasn’t as smooth as it had hoped, the discounts it is offering should have a positive impact. As shown by the dark diamonds on the chart below, the 20% discount Should push insurance premiums for Tesla vehicles below those for comparable ICE vehicles.  

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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