Dear Reader,
On Monday, I wrote about an exciting new development due to a regulatory change made by the Securities and Exchange Commission (SEC). More specifically, the SEC approved companies to do a direct listing on the New York Stock Exchange (NYSE) and raise new capital at the same time.
Historically, direct listings were not able to raise new capital when they listed on a stock exchange. This resulted in very few companies pursuing this approach. After all, the reason that private companies go public is typically to raise additional capital to grow.
I was excited about this change by the SEC. It would allow private companies to go public without being beholden to the traditional initial public offering (IPO) underwriting process.
But it appears that Wall Street doesn’t want this to happen. Yesterday, the Council of Institutional Investors (CII) stepped in to try and block this regulatory change.
On what grounds?
If we ask the CII, its position is that the new SEC regulation will allow companies to get around protections built into the traditional IPO process. In short, the CII believes that normal investors may be harmed by the new direct listings.
How magnanimous of the institutional investors…
I’m being sarcastic, of course.
We’re getting a real glimpse of Wall Street greed right now… an attempt to keep the “racket” going as long as they can.
Direct listings that allow companies to raise capital will open the door to IPOs that are far more fairly priced.
These listings will allow normal investors to access shares of newly public companies at prices that haven’t been controlled or manipulated by investment banks and institutional investors. And companies can direct list for a fraction of the price of a traditional IPO.
And this is why the CII has such a problem…
It represents foundations, endowments, large institutional investors, and other very wealthy people/organizations. They love the traditional IPO process.
Investment banks, acting as the underwriters, take about 7% of the proceeds of an IPO for their services. And both the investment banks and institutional investors gain access to pre-IPO shares in the best companies.
Both sides are perversely incentivized to underprice an IPO. This comes at the expense of the company going public, which could have raised more money at less dilution had it been priced accurately.
These underpriced IPOs may be priced, for example, at $30… But they start trading at $60 when they open up on the market.
Normal investors don’t have a chance to get in at the $30 price, and the investment banks, institutional investors, and high-net-worth individuals all double their money overnight. And the “smart money” will happily sell those overpriced $60 shares to unsuspecting investors.
Now we can easily understand why the CII wants to block these new direct listings from happening. And that also has implications for the planned Palantir IPO we discussed on Monday. Without being able to raise money on the direct listing, it only has three choices.
It can wait for the dust to settle and move forward with the direct listing at some later date… It can move forward with a traditional IPO… Or it can conduct a reverse merger into a publicly traded “blank check” company. These are known as “SPACs” (special purpose acquisition companies).
I can’t wait to see what happens…
In the meantime, let’s move on to some really interesting insights…
We have to start today by talking about Elon Musk’s big Neuralink presentation last Friday.
We first talked about Neuralink way back in July of last year. To bring newer readers up to speed, Neuralink is another one of Musk’s bleeding-edge companies.
It is developing a brain-computer interface (BCI) that implants tiny electrodes into the brain. This allows the brain to be connected to a computer. And that lends itself to countless applications.
Neuralink envisions the first application of its BCI to be medical. The system could help stroke victims and paraplegics regain mobility. And it could help amputees regain body control through advanced prosthetics they can control with their minds.
Neuralink presented its BCI prototype last Friday. It’s a small device – about the size of a coin.
Elon Musk Holding “The Link”
Source: MIT Technology Review
This device is packed with bleeding-edge semiconductors and sensors. And each device contains about 1,000 electrodes that link up with the brain when implanted.
In its presentation, Neuralink showed that these electrodes sense brain activity. The company demonstrated a pig with this brain implant, and it showed how the device could monitor and graph the pig’s brain activity in real time.
It could even predict how the pig was going to move its body before just before the pig actually moved – all by monitoring the brain activity.
Tracking Brain Readings
Source: Neuralink
This presentation was widely criticized by the academic and research communities. Some called it simple “theater.” They said that the device was nowhere close to being able to do some of the advanced medical applications Neuralink claims it will be able to do.
What the academics did not acknowledge was that this was simply a prototype demonstration. It’s not the final product.
In fact, Neuralink developed its BCI in just 18 months. And in that time, Neuralink also developed the robotic arm that surgically implants the device into the brain. It is basically an end-to-end system.
Some neuroscientists have worked in this space for decades without demonstrating any prototypes like these.
To me, the presentation was a Silicon Valley version of a neuro-scientific project. The Silicon Valley model is to innovate fast, iterate quickly, build on the best ideas, and make improvements as you go.
I remember when Musk was criticized for the work he was doing on electric vehicles (EVs) at Tesla. “It will never work,” they said.
Then he was criticized for his crazy idea that SpaceX could develop and deploy reusable rockets to get to space much cheaper than incumbent government agencies and defense contractors.
After that, he was criticized for his belief that he could use the Boring Company to take transportation underground and circumvent the freeways. I could go on and on.
Except Musk has been successful with each of those ventures. There are far fewer critics today than there used to be.
So I’m willing to bet that Neuralink will do some amazing things in the next 18 months. And this presentation will help the company attract additional funding and recruit new talent to advance the mission.
And hopefully, we won’t be surprised when Neuralink becomes the world leader in brain-computer interfaces that aren’t just used for medical purposes but for “connecting” humans with artificial intelligence in real time.
Quietly, Amazon just launched a brand-new product called Halo. And make no mistake, this is another Jeff Bezos masterstroke.
Halo is a wearable wristband that can track sleep, physical activity, body temperature, exercise intensity, and even voice patterns to determine stress levels.
The Halo Wristband
Source: Stat
It may look like Amazon is simply catching up to the Apple Watch, but there’s one key difference. Halo doesn’t have a screen. That’s the brilliant part about Amazon’s strategy.
Here’s why…
The low-end version of the latest Apple Watch 5 starts at $399 and goes up from there. In comparison, the Halo is $64.99, and it comes with much of the same functionality.
Of course, Halo’s pricing advantage comes from not having a screen. The simple tracker pairs with a smartphone app. That makes it much cheaper to produce.
This alone sets Halo up for widespread adoption. But there’s another layer to this story…
Amazon is going to work with the Food and Drug Administration (FDA) to get Halo approved as a medical device. At that point, it could be covered by health insurance.
Then Amazon can work with health care facilities and doctors to promote the product’s health monitoring benefits. The goal would be for doctors to include Halo in their medical tool kit as a very low-cost option for monitoring a patient’s health.
It’s not far-fetched to imagine a world where physicians prescribe Halo to track a patient’s activity, thus empowering the doctor to make better recommendations. And if insurance is going to foot the bill, it’s easy to imagine that most patients would happily adopt and use the tracker.
That’s why this is a Trojan horse.
Amazon is working toward mass-adoption by making Halo effectively “free” for consumers.
Then Halo can link up with Amazon’s existing and future health care services, such as its mail-order pharmaceuticals. Maybe patients could request to have prescriptions refilled through their smartphone app, and doctors could approve the prescription based on Halo data – no visit necessary.
I can even envision Halo having some kind of special vibrating alert indicating that it is time for a patient to take their medication.
Now, we may ask, why doesn’t Apple do the same thing with the Apple Watch?
Well, it may. But the insurance companies would much rather cover a $65 device than a $399 device. That’s why Halo’s design is brilliant. It’s all about cost-efficiency.
This is another step on the way to precision medicine… one of the huge trends we’re tracking in these pages. We’re on the cusp of a complete reordering of health care… turning medicine into something proactive and personalized.
So I’m very excited to watch this story play out. And I think the adoption of medical trackers is a positive move for Amazon’s business as well. Subscribers of The Near Future Report are already up 97% on this company in just under a year.
Abbott Laboratories just announced that the FDA has approved its new COVID-19 test, which the company plans to sell for $5. The kit is about the size of a credit card, and it includes a nasal swab that can detect viral antigens in just 15 minutes.
Abbott invested heavily into producing the test, and the company claims that it produces false positives only 1.5% of the time. And it produces false negatives only 2.9% of the time. That makes this one of the more accurate COVID-19 tests on the market.
Now, anyone who read Monday’s issue of The Bleeding Edge knows that the actual number of COVID-19 cases and COVID-associated deaths has been grossly overstated because of the current method of polymerase chain reaction (PCR) testing.
Up to 90% of all “confirmed” cases of COVID-19 did not have COVID-19 at all – they were false positives. And we know that according to the Centers for Disease Control and Prevention (CDC), only 6% of COVID-19 deaths are solely the results of COVID-19. The other 94% had two or three other underlying causes of death on average.
That means that the majority of the official deaths where COVID-19 was claimed as a comorbidity didn’t actually have COVID-19.
The latest data released by the CDC and the news about the PCR testing is just unbelievable – this is a scandal of epic proportions.
That said, there has been so much psychological damage done that most people won’t be able to accept that there was hardly any risk to anyone other than the highest-risk segment of the population. And the things that we have all been forced to do for ourselves and our children were for no purpose at all.
And that’s where Abbott’s new test comes in…
Abbott is gearing up to ship tens of millions of tests out to health care professionals in the U.S. this month. And the company plans to ship another 50 million tests in October.
The U.S. population is about 328 million people, so Abbott is shipping enough tests to cover about 20% of the population in the next two months. That’s impressive.
And if the test is as accurate as the company claims, we should see a greatly reduced number of cases, which will help ease the fear that’s been instilled by the mainstream media and those who want to keep the U.S. economy locked down through the elections.
Hopefully, we can soon get to the point where people understand that we need to protect a tiny subset of the population – the highest-risk segment.
The rest of us should get back to work, school, and normal life. That way we will quickly and safely build herd immunity to COVID-19, just as we have for all other coronaviruses before this one.
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.
