- Tesla is developing a humanoid robot…
- These “intelligent” NFTs might make you money…
- Bringing automation to the shipping industry…
Dear Reader,
$80 billion. For a company that has yet to manufacture and sell a single product.
Absolutely crazy…
A few days ago, electric truck manufacturer Rivian announced that it has submitted its draft registration to go public later this year. The initial public offering (IPO) is being positioned for some time around the Thanksgiving holiday in November at a target valuation of $80 billion.
Rivian is an exciting new entrant into the electric vehicle (EV) industry backed by Ford, Amazon, and a long list of venture capital (VC) and private equity funds. Rivian raised $2.65 billion this January at a $27.6 billion valuation, and then it went on for another $2.5 billion this July.
That’s one of the reasons that an $80 billion IPO doesn’t make much sense. Is the company now somehow worth almost three times more between January and November?
If that wasn’t enough, Rivian hasn’t yet shipped a single electric truck. Its first truck, the 2022 Rivian R1T, is expected to ship in the fourth quarter. I will say this, though… It’s a nice looking truck.
The 2022 Rivian R1T
Source: Rivian
Rivian has suffered numerous delays over the course of the last two years. The product was already supposed to be in consumers’ hands.
And it’s not just the R1T…
I remember back in 2019 when Amazon announced that it had ordered 100,000 electric delivery vehicles from Rivian. At that time, the goal was to have 10,000 of them delivered to Amazon by the end of this year. It’s looking like Amazon will be lucky if it sees that many by the end of next year.
And that’s OK. It is no small feat to turn up a new automotive manufacturing business. Producing high-quality vehicles in large quantities takes time and a lot of money. That’s why Rivian has already raised more than $11 billion over the last 10 years.
Tesla certainly missed a bunch of dates along the way as well. Complex products like these can be difficult to manage, and the automotive industry has a unique set of manufacturing and quality requirements in order to ensure that the vehicles are safe to drive.
Rivian – because it is a pre-product company and not manufacturing in volume yet – has had little leverage with its suppliers.
Its delays, in a large part, have been due to something I call a “tech shock.” The remarkable increase in demand for parts and products has caused suppliers to ration their products to their best customers. Inevitably, low-volume manufacturers – or in this case, no-volume manufacturers – aren’t at the top of the list.
In time, Rivian will get its products out the door. Hopefully, it will be successful. Having Ford and Amazon as backers will help a lot. But at what valuation?
We should remember that Rivian is a car manufacturing company. There is nothing really special about its battery technology, its business model (it is not asset-light), or its technology stack.
Tesla is one of the most successful artificial intelligence (AI) companies in the world. Rivian is not. It’s “just” a car manufacturer and should be valued as such.
For comparison, Ford, which invested in Rivian, will generate $129 billion in sales this year. And it has a $52 billion valuation. Is Rivian really worth $80 billion on essentially zero revenue?
Let’s give Rivian the benefit of the doubt and say that it can produce 100,000 vehicles in 2022 at an average price of $70,000 each. That’s $7 billion in revenue for next year. That’s also an 11.4 enterprise-to-sales (EV/Sales) valuation. Ford trades at an EV/Sales of 0.38, while General Motors is at 0.54.
Having a valuation of $80 billion and an EV/Sales of 11.4 simply doesn’t make sense. We’re not going to fall for it. Anyone who buys in at an $80 billion valuation is going to lose their shorts.
And who wins in a situation like this? The answer: all of those private equity and venture capital firms looking to sell their early shares at an $80 billion valuation the first chance they get.
I doubt Bleeding Edge readers will be enriching them. I’m amazed that the investment banks have the gall to try and sell this deal at these levels. They will probably get away with it.
But there are alternatives in this space. In fact, I have a company in my Exponential Tech Investor portfolio that I am far more excited about, with a unique approach to its business and technology trading at a fraction of the price.
That way, we’ll be reaping the profits, not the other way around.
Tesla is making bipedal robots…
Tesla recently held its AI Day and announced plans to manufacture humanoid robots under the codename “Optimus.”
Since Tesla is primarily known for its electric cars with Autopilot self-driving capabilities, many viewed the news that Musk and his team were entering the world of robotics as unrealistic. The media treated it as a joke.
Yet Musk knew the media would not take him seriously. So he brought a “humanoid” out on stage when making the announcement. Take a look for yourself. It was absolutely hilarious…
Tesla Reveals “Robot”
Source: YouTube
And during his presentation, he quipped that humans will be able to outrun the Optimus robots.
Yet we shouldn’t be distracted by all the humor. This is no joke – Tesla will deliver. In fact, I expect to see a prototype as early as next year. Here’s why I’m so convinced…
Most of the software work on artificial intelligence (AI) is already done. It is far more complex to develop a neural network advanced enough to safely drive a car in an ever-changing environment.
Tesla can leverage the work it has already done on its vehicles for a robot that moves five miles per hour in a clearly defined space. That task is much easier than what is needed for a self-driving car.
Obviously, there will be some differences. The sensors and computer vision will need to be better suited to operate indoors. The AI needs to be trained to handle various household tasks. And the robot needs to learn to walk.
But not only does Tesla already have the foundation for its AI, it also has built its Dojo – the world’s most powerful supercomputer for training an AI.
The bipedal robot is expected to weigh 125 lbs. and stand five feet, eight inches tall. And it will perform many of the dangerous, boring, repetitive, or otherwise undesirable tasks that are primed for automation. Optimus will also respond to voice commands from its owner.
So this is a remarkable announcement. I’ve long said Tesla is the most successful AI company in the world. And this thesis – which I laid out when I made my original recommendation for Tesla back in 2018 – is playing out perfectly.
With this latest announcement, people are beginning to recognize that Tesla is not just a car company.
A Tesla AI robot is something that feels straight out of science fiction. But just like we saw with Atlas, another bipedal robot from Boston Dynamics, this technology is becoming a reality.
Is it such a stretch to imagine taking Tesla’s AI, combining it with something like Atlas, and providing it some task-specific training? It’s not a stretch at all.
Adding advanced self-driving AI technology into a robot that can move similar to Atlas will shock the world. I’m looking forward to seeing what kind of early use cases catch on with Tesla’s Optimus.
The addition of a robotics division has the potential to vault Tesla into becoming the most valuable company in the world.
Intelligent NFTs…
Alethea AI is a company creating “intelligent” non-fungible tokens (NFTs). It sold the first AI NFT for nearly $500,000 at the Sotheby’s auction house this past June.
Alice, the First AI NFT
Source: Twitter (@Sothebys)
And Alethea followed up with another private sale in August that raised $16 million. Backers included billionaire entrepreneur Mark Cuban as well as Galaxy Interactive, Dapper Labs, and Gemini, to name a few.
As a reminder, NFTs are digital collectibles. They allow us to cryptographically secure and authenticate unique assets or data on a blockchain.
And here’s why Alethea AI’s NFTs are so exciting.
The company is developing a scalable infrastructure capable of supporting “intelligent” NFTs.
The software that makes this possible is GPT3. Some readers may recognize the name. We have mentioned GPT3 previously in The Bleeding Edge.
It is an advanced natural language processing system that is capable of predicting speech or writing a novel based on a few words. And it was all developed by bleeding edge AI company OpenAI.
Alethea AI plans to use GPT3 to make its NFTs come to life. The idea is to launch these intelligent NFTs into a metaverse – a virtual environment where people can gather. There, the NFTs will be animated, interactive, and capable of holding a conversation. This means users will interact with not only one another but also these NFTs. And the NFTs can interact among one another.
What is interesting here is we have already proven GPT3’s technology. And now we are mixing it with the concept of NFTs. We’re just taking it even further by deploying all of this tech in a metaverse.
While on the surface this is remarkable, we can imagine where this might go…
In a metaverse environment that is built for not only games or social experiences but businesses and transacting… we can conceive that these “smart” NFTs could earn income for their owners by performing tasks. As an example, perhaps the NFT helps promote a product or enables a business transaction for a prospective customer.
This raises an interesting question…
If this is an income-producing or yield-producing asset, is it a security?
From an investment standpoint, one could very well make a case that it is. An NFT that could generate 3% returns per year would be an income-producing asset. And that asset very well might increase in value over time – much like how a trust or bond might act.
It’s a question the U.S. Securities and Exchange Commission (SEC) will likely address in the coming years. In the meantime, projects like this are raising capital from industry leaders that will help NFTs become an everyday asset.
This is just one more tailwind behind the “tokenization” trend we’re seeing play out…
And if you want to learn more about investing in opportunities in the NFT space, I highly recommend watching my recent presentation on this trend. Simply go right here for the story.
This ship navigates with no captain aboard…
Our last story today touches on a kind of autonomous vehicle we don’t often think about.
A company called Yara International out of Norway has been developing a fully autonomous cargo ship called the Yara Birkeland that requires no humans on board.
The Yara Birkeland Electric Cargo Ship
Source: Electrek
It is a fully electric ship that – once fully charged and loaded with cargo – can sail to its destination without human navigation.
What makes this technology so compelling is the fact that 98% of Norway’s electricity production comes from renewable energy sources – primarily hydropower.
The country is unique in that – due to its steep valleys, rivers, and abundance of rainfall and snow melt – it is perfectly suited for hydropower.
And with all of this clean renewable energy, the country can power these ships without fossil fuels.
This means humans are really only needed at the dock for loading and unloading cargo.
But in a world where robotics and AI are starting to converge, it’s not hard to imagine humans being replaced at the dock, too.
Readers may remember Boston Dynamic’s Stretch robot. It can easily pick up boxes and move them around a warehouse thanks to its suction cups capable of lifting up to 50 lbs. So one day soon, AI robots might move cargo to and from ships as well.
And right now, the industry needs this sort of technology. Cargo ships are backed up at ports because people are not willing to work.
With fully autonomous cargo ships and robots loading and unloading at the dock, we can address labor shortages.
A convergence of renewable energy, AI, and robotic technology is happening right now.
The ship’s maiden voyage will take place later this year. It will travel between two Norwegian towns and is likely to be the first voyage of many.
And with each cargo ship capable of replacing 40,000 truck journeys a year, we can expect to see more ships like this produced over time.
Regards,
Jeff Brown
Editor, The Bleeding Edge
P.S. I have an important message to share… It has to do with an opportunity I see building around Apple’s upcoming launch – which I believe could trigger an event with up to $12.3 trillion in profit potential.
We’ve only seen this kind of opportunity twice in the past 20 years. And right now, almost no one is talking about it. That’s our chance…
If you want to know how to prepare for this move, then please register to attend. I’ll share all the details at my confidential briefing on September 22 at 8 p.m. ET. Please don’t miss out.
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