- The two most anticipated IPOs of 2021…
- This stodgy old company is getting a makeover…
- Why I’m already studying 6G…
As longtime readers are aware, I have spent the last few years searching for ways to bring my subscribers the kind of investment opportunities private and institutional investors have long enjoyed.
For too long, the best profits have been withheld from regular investors. They’ve been left with just the table scraps… but I’m determined to change that.
I’ve made huge progress toward this goal with the launch of my research services focused on early stage biotech companies and special purpose acquisition corporations (SPACs). And I haven’t stopped looking for new ways to help my readers balance the scales in their favor.
One of my priorities for Brownstone Research this year is helping my subscribers grow their wealth in all markets, not just technology and biotechnology. There is always a bull market in at least one asset class. And I want to make sure that my investment research is capturing those gains wherever they are coming from.
That’s why I want everyone to be aware of a significant event happening tomorrow morning. At The Outlier Investment Summit, I will be presenting alongside expert financial analyst Jason Bodner on one of the newest ideas here at Brownstone Research.
I’ve followed Jason’s work for three years now, and it is incredible. He shares my mission to level the playing field for investors.
Jason specializes in finding investments that outperform the markets – he even crafted his own proprietary system to help identify these opportunities.
It leverages the kind of data and information that normal investors simply don’t have access to. It empowers us to “see” what we otherwise wouldn’t be able to… and that consistently leads to outsized profits.
I’ll be making an important announcement at tomorrow’s event. It’s something that Jason and I have been working on for the last several months, so please tune in. To attend this briefing, please go right here to sign up.
These blue-chip fintech companies are going public…
We’ll start today with some intel on the two most anticipated initial public offerings (IPOs) of the year – Coinbase and Stripe.
Regular readers will be familiar with both these companies. They are two blue-chip financial technology (fintech) companies that I’ve been tracking for about a decade now.
Coinbase is the world’s most successful digital asset exchange. And it is essentially one of the largest online brokers on the planet.
Stripe is the largest and most successful tech company powering online payments for internet commerce.
We talked earlier this month about how Coinbase is not going the traditional IPO route. Instead, it is circumventing the investment banks with a direct listing.
And as we discussed, Coinbase’s last known valuation was $8 billion after its Series E funding round back in October 2018. But just a few months ago, rumors were swirling that it was worth about $30 billion.
The rumors were way off the mark…
Trading in the secondary markets is now signaling that Coinbase is worth over three times more than $30 billion.
Secondary markets are where institutional funds, high-net-worth individuals, and accredited investors can trade pre-IPO shares of private companies before they go public. This allows them to take some money off the table ahead of an IPO.
It drives me crazy that investing in secondary markets is off-limits to nonaccredited investors. By the time companies get to the size and success of Coinbase and Stripe, the risk is off the table. These are some of the most exciting, and ironically, safest investment opportunities that should be accessible to all investors.
Based on where Coinbase’s pre-IPO shares are trading right now, investors are valuing the company at $100 billion. Incredible. That’s up 12.5x since its last venture capital round just over two years ago. And we can be sure that Coinbase will go public at an even higher valuation.
It’s the same story for Stripe.
Stripe’s last known valuation was $36 billion after its Series G venture capital round last April. But pre-IPO shares are trading at levels that value the company around $115 billion.
Both Coinbase and Stripe have more than tripled in value in the last several months. Well, at least for the “insiders” who have access to secondary markets. Normal retail investors are locked out of secondary-market trading entirely.
And I should point out that the venture capitalists have kept both of these great companies private for more than a decade. Coinbase and Stripe should have gone public years ago.
This is a major distortion in the market that we’ve talked about before. The insiders keep the best companies private for as long as they can, taking most of the gains for themselves. Then they look to dump their overvalued shares on unsuspecting investors at enormous valuations when the companies finally go public.
One of my primary motivations in starting Brownstone Research was to fix this distortion.
We can’t stop it from happening, but we can show normal investors how to get pre-IPO shares in some of the most exciting companies alongside the insiders. I launched a new premium service called Blank Check Speculator for just this purpose. Go right here to learn more about my new service.
And I am working on a new private investing service behind the scenes right now that will expand our reach even further. Readers can expect to hear more about that in the coming months.
Can a stodgy incumbent transform itself?
Regular readers will be surprised to hear me say that I have been following IBM closely in recent months. The company installed a new chief executive officer (CEO) last year to shake things up, and I actually like what I am seeing.
IBM was all over the place when its new CEO Arvind Krishna took over. It was spending a huge amount of money on various pet projects that provided little return for the company. And IBM was focusing on things that had nothing to do with its core competencies.
We talked back in October about how IBM planned to spin out its Managed Infrastructure Services unit into a new public company. This is a great move because this is a lower-margin, slow-growth business that doesn’t scale well. That was a good start for the new CEO.
And IBM just announced that it is going to sell its Watson Health business. This is another smart move.
Watson Health is one of those businesses that looks great from the outside. It employs artificial intelligence (AI) technology to help hospitals, insurance companies, and biotechnology companies manage their data.
Sounds exciting, right? It’s easy to look at this and say, “That’s the future of IBM.”
The problem is that IBM has poured billions of dollars into Watson Health, yet it produces just over $1 billion per year in revenue. That’s less than 2% of IBM’s annual revenues.
In other words, Watson Health doesn’t move the needle at all when it comes to the top or bottom line. What’s more, the business loses money every year. It is incredibly expensive to maintain.
IBM is not a data analytics company. It has long struggled to gain access to large data sets of health records to extract intelligence. This is simply not its core business. It may look good for marketing material, but IBM has almost as much debt as it has revenue. And its share price has dropped 42% since 2013.
If IBM can successfully spin out its Managed Infrastructure Services unit and sell off Watson Health, it will suddenly become a high-margin cloud services company without all the extra baggage. That business might actually have some potential. We would see a vast improvement in the company’s financial performance.
IBM is not a company I would recommend buying yet. But I will continue to follow IBM closely from here.
The new CEO is making some bold and difficult moves. And that’s exactly what is needed. We’ll stay tuned…
The industry is getting serious about 6G…
Believe it or not, I’ve been doing more and more research on sixth-generation wireless technology (6G) recently.
Yes, I know we are in the throngs of growth with 5G right now. The 5G wireless network build-out continues to progress. Consumers are adopting 5G-enabled devices such as the iPhone 12. And we are starting to see incredible new services deployed over 5G.
While the 5G boom is gaining steam, however, industry insiders are already starting to work on developing 6G technology.
Companies like Apple and Samsung have been hiring engineers specifically to work on the next generation of wireless networks. They are starting to engage with standards groups and industry bodies to design the core framework around what 6G will look like.
And I’m seeing a lot of buzz around terahertz frequencies.
We talked last month about how 5G deployed over millimeter wave spectrum enables lightning-fast speeds above one gigabit per second (Gbps). These frequencies tend to be in the 28 GHz and 39 GHz ranges. In other words, 10s of GHz.
Well, 6G deployed over terahertz frequencies will be even faster. We can expect network speeds of at least 10 Gbps. That’s at least 10 times faster than the speeds at which I have tested 5G around the country.
And a network at these frequency levels will require even more base stations than 5G.
With 5G, base stations tend to provide high-performance coverage with a radius of about 700–1,000 feet. With 6G operating at sub-terahertz and terahertz frequencies, base stations will likely have a high-performance range of 300–500 feet. They’ll be capable of maintaining those 10 Gbps+ speeds.
That means we’ll need at least twice as many base stations to cover the same geographical area with 6G.
Of course, that means the wireless carriers will have to spend even more money on infrastructure when the 6G wireless network build-out begins. That will lead to some incredible investment opportunities for us in six or seven years.
So why are we talking about this now?
One of the keys to my success is that I study technology years in advance – well before other analysts are even aware of the opportunity. I get to know who the key players are and how the intellectual property picture shapes up.
In this way, I already know what the best investments will be when the new technology gets closer to deployment. And that’s how I position my subscribers ahead of the herd.
This is why I was pounding the table on 5G in 2016 and 2017. That was well before the network build-out ramped up. And in Exponential Tech Investor, we built a portfolio of 5G companies early in the game to capitalize on this big trend.
Fast forward to today, and we have tripled our money on three 5G plays. And we are sitting on gains of about 66% and 58% on two other 5G companies. That’s the power of being first to the table.
And if any readers want to learn about my No. 1 pure play in 5G right now, go here for all the details.
We can expect to see companies producing early versions of 6G in 2027 and 2028. And at Brownstone Research, we’ll already be well-positioned when that happens.
Editor, The Bleeding Edge
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