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It's Monday, November 25th, 2019. Please enjoy ARK's weekly newsletter curated by our thematic analysts and designed to keep you engaged with disruptive innovation. Have a wonderful day!

 

Tesla’s Cybertruck: Shattered Windows and Smashed Expectations

Follow Tasha on Twitter @TashaARK

 

Tesla moved fast and broke things, literally, when it unveiled its Cybertruck on Thursday night. While many reviews focused initially on its unusual design, the features, functionality and price should eventually take center stage. The single motor model will price at $39,900, lower than both the $50,000 expected as well as the average transaction price of a full price pickup truck in the US. Its towing capacity and approach angles rival the competition as well. At the higher end, the tri-motor variant will price at $69,900 with an impressive 500 miles of range and the ability to accelerate from 0 to 60 miles per hour in 2.9 seconds. While its design could be a showstopper for some potential customers, the Cybertruck definitely delivers on value and functionality. Note that the PT Cruiser, considered one of the ugliest cars ever made, sold over 145,000 units per year at its peak, higher than the 50,000 “Hummer-like” niche sales level that many analysts concluded would be its potential.

 

According to Google search volume, while Tesla did smash a couple of windows, it still piqued more buyer interest than did Ford’s Mach E on the day of its launch event last week, as shown below. Orders already have topped 146,000, perhaps inspired partly by the low $100 deposit.

 

 

ARK Invest SNL Graphic 1

 

Source: Google Trends

 

According to ARK’s analysis, Tesla Cybertruck search volume was roughly on par with Model 3 search volume the day of the launch event, with high truck sales states like Montana, Wyoming, and West Virginia particularly interested, as shown below.

 

 

ARK Invest SNL Graphic 2

 

Source: ARK Investment Management LLC | ark-invest.com; Google Trends

Note: Relative search volume of "Model 3" versus "Cybertruck" on day of launch applied to state level search volume distributions weighted by populations to infer state level search quantities. Estimated 12 hours after launch event.

 

Tesla may have chosen an off-brand design to appeal to a market that does not seem to make purchase decisions based on the environment and may never have given much thought to purchasing a Tesla. In fact, the Cybertruck is almost devoid of traditional Tesla branding logos, suggesting perhaps that it just launched the first of a new Cyberpunk line of vehicles.

 

 

First CRISPR Trial Data Hold the Promise of Curing Human Disease

Follow Manisha on Twitter @msamyARK

 

In a landmark event on Tuesday, CRISPR Therapeutics (CRSP) released the first in-human trial data based on CRISPR gene-editing technology. The verdict? Not only did it work, but it cured two patients of rare hematologic diseases: beta-thalassemia and sickle cell disease!

While the data were limited to two patients, these trials are an important proof-of-concept that CRISPR technology is safe and efficacious in treating and curing certain human diseases.

 

Patient 1 was a 19-year-old female suffering from beta-thalassemia, the treatment of which required 17 blood transfusions on average per year. After a single administration of CRISPR Therapeutics’ drug, CTX001, the patient has not had one transfusion in 9-months and has reached hemoglobin levels of 11.9 g/dL, which is normal. Afflicted with sickle cell disease, Patient 2, a 33-year-old female, had experienced 7 vaso-occlusive crises (VOC) within one year resulting in hospitalization. After a single administration of CTX001, the patient has had no VOC events in the last four months. Further, according to tests, 46.6% of her blood expressed fetal hemoglobin, which has strong binding affinity to oxygen, well above the 25-30% necessary to register as a ‘functional cure’.

 

Sickle cell disease and beta-thalassemia are debilitating blood diseases characterized by extreme pain, organ failure, and shortened lifespans. Each year, 300,000 children are born with sickle cell disease and 60,000 with beta-thalassemia globally, creating a huge unmet need. The market for functional cures could be well above $20 billion.

 

Perhaps more important, the results of these early human trials demonstrate that CRISPR technology can address diseases once thought incurable. CRISPR Therapeutics’ impressive data increase the odds that Intellia Therapeutics (NTLA) and Editas Medicine (EDIT) - the other companies with foundational patents to CRISPR technology – will find success as well.

 

Is Every Software Company Going to Become a Payments Company? 

Follow Max on Twitter @mfriedrichARK

 

In a recent paper, Bain Capital argued that software companies will cut ties with payment facilitators such as Adyen, Stripe, or Square and become payment facilitators themselves. It also claimed that infrastructure providers such as Finix, a Bain Capital portfolio company, will enable this transition.

 

The authors compare the likely transition in payments to major shifts in technology infrastructure to the internet, cloud and mobile. For example, most companies have incorporated the internet into their value propositions and distribution strategies, disintermediating ‘internet companies’. Similarly, the authors argue that ‘payment companies’ will disappear, as most companies will in-source payments to offer more customized customer experiences and maximize margins.

 

Recently, some large software companies like Uber and Dropbox have pulled vendor services in-house. Uber disintermediated Twilio with an in-house messaging solution, while Dropbox dropped Amazon Web Services (AWS) in favor of its own cloud infrastructure.

 

Uber spends $1 billion per year on credit card fees which would accrue more to its benefit if it developed its own payments infrastructure. That said, given disappointing performance since its IPO, Uber probably would benefit more by focusing on priorities we believe critical to its future, such as autonomous driving. 

 

Companies smaller than Uber and Dropbox often rely on dozens of software vendors to stay focused on their core competencies and remain agile. In our view, most large companies also would benefit by sticking to their core competencies and top priorities in today’s hyper competitive environment.

 

Netflix Content Production Is as Cost-Efficient as That of Studio Blockbusters

Follow Nick on Twitter @GrousARK

 

ARK Invest SNL Graphic 3

 

With 158 million subscribers, Netflix’s global footprint is an advantage that we believe no one else in the so-called “Streaming Wars” can tout. That said, producing content that will translate and perform effectively in different markets around the world is no easy task.

 

Netflix’s content budget will approach $15 billion and, in our view, has been an unnecessary source of concern in the investment community. Thus far, it has created and purchased content that has delighted its global audience. As an example, just four weeks after its debut, 57% of Netflix subscribers had watched Bird Box, which cost only $30 million to produce. As shown in the graph above, Bird Box enjoyed roughly 15 viewing hours for every production dollar spent, on par with Incredibles 2 by our estimates. Impressively, 25% of Netflix subscribers have viewed more than half of its top 10 original movies and TV shows, swamping the single-digit ratings typical today of traditional TV.

 

 

Microsoft’s Bing Taps Nvidia’s GPUs for AI Inference By BERT

Follow James on Twitter @jwangARK

 

Increasingly, enterprises are adopting BERT—a powerful deep learning model for understanding language. This week Microsoft announced that it is adding BERT to Bing, helping the search engine to understand complex search queries much more effectively.

 

BERT is an order of magnitude more computationally demanding than prior language models and, therefore, expensive to deploy at scale. To reduce the cost, Microsoft ported the BERT code to Nvidia GPU servers, automatically increasing computational speed 3x. Adding GPU-specific software optimizations, Microsoft accelerated the speed almost 1,000x.

 

In the recent past, Microsoft has devoted considerable resources to Project Brainwave—AI acceleration with Field Programmable Gate Array (FPGA) chips. FPGAs tend to perform better than GPUs on sequential AI algorithms such as Recurrent Neural Networks (RNNs), while newer language models like BERT run better on parallel processors such as GPUs. As language models have evolved from RNNs to BERT, Microsoft has accelerated its AI processing by shifting from FPGAs to GPUs.

In Other Innovation News

Bitcoin's Recent Price Decline
Could bitcoin’s swift sell-off be a function of the PlusToken Ponzi scheme? The movement of funds among wallet addresses suggests so.

 

 

A Boon for Solar
Since October 9th, PG&E has shut down electricity in California five times, impacting 2.04 million customers. In its third quarter earnings call, the top residential solar installer in the US, SunRun, disclosed that its battery storage product is experiencing ~15% attach rates nationally, 30% in California, and 60% in the Bay Area. The value of energy storage is rising, forcing more homeowners to consider solar + storage in areas where the electric grid is no longer a given.

 

 

 

 


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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