Dear Reader,
Like I mentioned on Friday, there’s an event coming up this Wednesday that I don’t want any of my readers to miss. It has to do with why I recently traveled back to Silicon Valley for the first time since the pandemic.
During my trip to the Valley, I’ve been digging into “Penny IPOs.” These are small tech stocks that go public with their biggest growth days still ahead of them.
That’s rare these days. Many of the exciting initial public offerings (IPOs) we hear about these days – think Snowflake or Airbnb – involve companies that no longer have the chance to 10X a regular investor’s money. They’re simply too big already by the time they access the public markets.
But Penny IPOs are different. They still go public during their earliest stages of development. And that means they can help retail investors get on the path to build real wealth. That’s why I’ve been building a list of my top Penny IPOs…
And this Wednesday, June 23, at 8 p.m. ET, I’m going to share my findings at a special event I’m calling Silicon Valley “Unlocked.”
I’ll tell attendees all about how I locate the best Penny IPOs, what’s been happening in Silicon Valley, and how to profit. I’ll even share the name of my top private Penny IPO for free.
So if you haven’t already, please go right here to make sure your spot is reserved.
I’ll see you on Wednesday!
Now let’s turn to today’s insights…
El Salvador became the first country to adopt bitcoin as legal tender.
The news hit earlier this month during the Bitcoin 2021 conference in Miami. Days later, the country’s legislature passed the bill with a supermajority of 62 out of 84 lawmakers voting in favor of it.
This now means every business in the small Central American country must accept bitcoin for goods and services.
The news is very symbolic for bitcoin. Governments around the world have refrained from embracing the cryptocurrency up until now. And seeing a country like El Salvador breaking the trend makes a lot of sense.
El Salvador is a smaller country, which makes it easier to make such sweeping changes. The country has pegged itself to the U.S. dollar since at least 2001.
As of late, it’s been whipsawed by the U.S. government’s grossly irresponsible monetary policy, which has devalued the dollar and created inflation for the goods and services that its own taxpayers need every day.
Just last week, figures from the U.S. Bureau of Labor stated the annual inflation rate for the U.S. is now 5%. This is a noticeable change from the 1.4% reading at the start of the year.
And El Salvador has no voice in countering the destructive monetary policy taking place in the U.S.
This is why it is turning to bitcoin. It’s an asset that’s increasing in value relative to the U.S. dollar, up 25% year-to-date. But that’s not all.
El Salvador is looking to position itself as a hub for bitcoin mining.
The country sits on 23 active volcanos. And the country is planning to power bitcoin mining operations via geothermal power from the heat created by these volcanos. In other words, 100% clean energy.
The discussions about using clean and renewable energy for bitcoin mining are already underway. And El Salvador’s decision will attract investment and development to the country.
It is a smart play for El Salvador. And while these moves won’t have a material impact on the country’s $27 billion economy or the price of bitcoin, it’s one of those events that can cascade into something much bigger.
When we look back on this event, we will likely mark it as an inflection point in bitcoin’s history. Here’s why…
This type of event can lead to more countries embracing bitcoin or other cryptocurrencies with pre-programmed monetary policy. And this can lead to wider acceptance across the globe.
The interesting piece here is that the World Bank was not a fan of this historic event.
When El Salvador asked for help in implementing bitcoin as legal tender, it was denied.
The World Bank expressed its concerns about the legitimacy and environmental impact of bitcoin mining. This is somewhat ironic given El Salvador’s geothermal proposal.
Any further developments will be important to watch, as more countries are starting to express support for El Salvador’s decision. This means the World Bank might be fielding similar requests in the coming months.
And if I had to place my bet, I wouldn’t put my money on the World Bank being able to stop this trend…
In a sign of how much the air taxi space is heating up, another startup announced it is going public via a special purpose acquisition corporation (SPAC).
As a reminder, SPACs are “blank check” companies formed for the sole purpose of allowing private companies to go public by reverse merging into the SPAC. For the company going public, that process is much cheaper and less tedious than a traditional initial public offering (IPO). To learn more about my top SPAC recommendations, please go right here.
And the latest air taxi company going public is Vertical Aerospace. It builds electric vertical takeoff and landing aircraft (eVTOL).
Its latest electric aircraft can travel 200 miles per hour (mph) with a range of 100 miles on a charge.
Here’s its latest design, the VA-X4.
Vertical Aerospace VA-X4
Source: Vertical Aerospace
The aircraft makes traveling in or around metropolitan areas easier thanks to its size and vertical takeoff capabilities. There’s no need for a long runway.
It also means a traveler can use these air taxis to get to and from large airports like Los Angeles International, LaGuardia, or Ronald Reagan Washington National Airport. This means less time spent in traffic.
What makes Vertical Aerospace a compelling startup is that it has already secured 1,000 preorders for its latest aircraft. These orders come out to a value of $4 billion. That makes this an IPO to watch.
What I really like about this deal is the list of some of its backers – American Airlines, Rolls Royce, and Honeywell.
These investors make sense, as they represent future business for Vertical Aerospace. It’s strategic capital being invested, and I’m a fan of deals where this takes place.
Now, what’s interesting here is the timeline for its latest aircraft, the VA-X4. It’s scheduled to be ready for commercial flights in 2024.
You may recall we have written about several other companies involved in the air taxi space. These include Volocopter, Joby Aviation, and Archer Aviation. Each one has gone a similar route via a SPAC.
And like Vertical Aerospace, they each have 2024 in mind as a launch date.
We are seeing multiple air taxi companies raising capital to meet this 2024 timeline. And each one is raising capital from future customers, giving the air mobility trend great credibility.
What’s clear here is new forms of air transportation are coming sooner than many realize, presenting great investment opportunities. We’ll continue to monitor the space to pick the leaders of tomorrow.
We just got a big announcement from the autonomous vehicle tech company Argo AI.
The last time we wrote about Argo AI, it had received $2.6 billion from Volkswagen last year. This helped make it one of the biggest players in the self-driving space.
And recently, the company announced it has developed its own long-range LIDAR technology that can see 400 meters away. For readers unfamiliar with LIDAR, it stands for light detection and ranging. It measures distance using laser light and maps out a 3D world.
Argo’s technology came out of a prior acquisition of Princeton Lightwave back in 2017. Princeton Lightwave had extensive experience in developing and commercializing LIDAR. And now we’re seeing the results of this acquisition.
Argo CEO Bryan Salesky says the technology is approaching the level of a human driver in terms of safety. This tells me it won’t be long before the AI – enabled with sensors like LIDAR and cameras – outperforms humans in terms of safety. It’s a great development.
There is also talk from the CEO about Argo AI going public within the next 12 months. This is not a surprise. So many of the LIDAR technology companies and autonomous driving tech companies have been accessing the public markets.
In fact, we spoke not long ago about Aurora, the self-driving technology company backed by Uber and Amazon.
With Argo AI considering a 12-month timeline, I expect we’ll see one last financing round in the next six months. That would likely be the last round before it IPOs.
What I find interesting here, however, is that all the major players in the autonomous vehicle space have developed their own LIDAR technology rather than coming up with a single standard option. This includes General Motors’ Cruise, Google’s Waymo, Aurora, and now Argo AI. (Tesla, on the other hand, does not even use LIDAR for its autonomous technology.)
And this raises a question. If all the major autonomous vehicle players already have their in-house LIDAR and camera solutions, who will the stand-alone LIDAR companies be selling to?
Companies like Velodyne, Luminar, and Innoviz have already gone public at ridiculous valuations, yet their largest short-term market opportunities have their own in-house solutions.
This is the primary reason I haven’t recommended any stand-alone LIDAR stocks to date. In fact, the two companies I just mentioned are both down 56% and 48% since they began trading, respectively.
That doesn’t mean these companies don’t have good technology. It just means that they went public at inflated valuations, and their share prices simply need to fall to levels that are appropriate for the fundamentals of their business and their growth prospects.
In time, their primary customers will be Tier-1 automotive suppliers and, at times, the auto manufacturers themselves.
And as we well know, the legacy automakers are far behind companies like Tesla, Waymo, and Aurora when it comes to autonomous tech. That means revenues are also behind as well.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
