Dear Reader,
Hours after Friday’s issue of The Bleeding Edge was published, the Food and Drug Administration (FDA) stepped up and provided emergency use authorization (EUA) for the Pfizer/BioNTech COVID-19 vaccine.
The first shot was delivered this morning to a nurse at the Long Island Jewish Medical Center outside of New York City.
The FDA could only drag its feet so long. With the U.K. having already administered the vaccine for a full week, and with the at-risk population still in need, there was little choice left but to act.
It has been fascinating to watch how the voices of dissenting experts in epidemiology and virology are being scrubbed from the internet. Several have raised concerns about the safety and side effects of the Pfizer vaccine, but it is very hard to find that information now on Google.
I noticed a remarkable change in search results over the weekend. The search results are being filtered. Just as there was no consensus from the FDA advisory committee, which is a panel of experts, the same situation exists elsewhere around the world.
Even discussions at the Centers for Disease Control and Prevention (CDC) revealed strong differences of opinion concerning those with a history of severe allergic reaction to injectable medications or vaccines.
Some believe that anyone with these kinds of allergic reactions shouldn’t take the vaccine. Others believe that only those with a known reaction to specific ingredients should avoid the vaccine.
Worth mentioning is that about 1.6% of the population experience a severe allergic reaction to a type of food, medicine, or environmental exposure. That’s a material part of the population. And the U.K. has already seen two cases of severe allergic reactions from two health care workers that were given the vaccine last week.
An EUA is not an FDA approval. It is simply an authorization given to use a drug or therapy in an exceptional case. This would be one of those times.
Which is all the more reason that information and opinions from those who are experts in their fields should not be suppressed by companies like Google, Facebook, and Twitter.
Those who are in the at-risk segment of the population should have more information, not less, so that they can have informed discussions with their physicians to determine whether or not they wish to take the vaccine.
The decision to do so, or not to do so, is all about relative risk and our own personal circumstances and beliefs.
My family and I will not be taking the vaccine. Why? Because we are not at any real risk.
Aside from developing a natural immunity to COVID-19 after having contracted it myself, given our ages and general health, we are at a higher risk of severe illness from an influenza or pneumonia than we are from COVID-19. Why would we introduce risk when we are not at any relative risk?
Now on to today’s insights…
Last week, the Federal Communications Commission (FCC) began a spectrum auction that is very strategic for the 5G wireless network build-out in the U.S. In fact, the spectrum being auctioned right now will be the “cornerstone” of 5G.
Most people don’t think about how wireless networks function. They don’t have to. We just turn on our phones, they connect seamlessly to the networks, and we go about our business.
But all wireless networks must be deployed over radio spectrum, and each wireless carrier must strategically acquire that spectrum over time.
This spectrum is typically sold at auction, where companies must bid on the available spectrum in specific geographic markets across the country. It is a lengthy and expensive process.
For each new generation of wireless technology, it typically takes a few years for wireless carriers to patch together a patchwork of spectrum across the country, enabling them to build their networks and deliver services.
And that’s where the auction that started last week comes in. This auction features what’s called C-band spectrum.
Historically, C band has been used for satellite services. But the FCC offered the satellite companies as much as $10 billion to move off the band and make it available to wireless carriers for 5G.
What’s so strategic about C-band spectrum is that it operates in the “middle” frequencies, in between the low bands and the high bands.
We have talked before about how AT&T and T-Mobile have been deploying 5G in low frequency bands. The advantage there is that a single cell station can cover wider geographic areas, so they don’t need to put up as many towers.
However, 5G operating at these frequencies cannot provide the high-speed, low-latency performance that we expect from 5G. It’s much closer to 4G when it comes to performance.
On the other extreme, Verizon is building its 5G network in high frequency bands, also known as the mmWave band. This is real 5G with 1 Gigabit-plus speeds and almost zero latency.
But it is much more expensive to deploy in the high frequency bands because it requires more towers and infrastructure. The signal doesn’t carry as far at those performance levels.
C band is in between the two. In many ways, it is the “sweet spot.”
Building a 5G network in C-band spectrum allows it to cover more geography with fewer towers than it can in high frequency band spectrum. Yet it can still offer much higher performance than 5G deployed over low frequency band spectrum.
This is why C band will be the “cornerstone” of 5G networks.
For this reason, the wireless operators have been bidding aggressively on this spectrum. It is expected that, collectively, carriers will pay between $30 and $45 billion for the available C-band spectrum.
The great news is that this C-band spectrum will speed up how quickly 5G networks are built out around the United States. And it will dramatically improve 5G services available to consumers.
But there is a catch.
We now have a number of 5G-enabled smartphones on the market, but only one of them can support C-band frequency. That’s the iPhone 12.
And that means consumers who bought any other 5G phone up to this point will be disappointed. The reality is that, depending on where we are at any given time, we may be accessing the slower low frequency 5G networks, the mid-frequency C-band networks, or the ultra-high performance high frequency bands.
But for those who do not have an iPhone 12, it will be either the low or the high bands. They won’t be able to access the C-band 5G deployments without purchasing another 5G-enabled phone.
This is one more reason I’m a fan of the latest Apple iPhone release…
We talked about Stripe earlier this month.
Stripe is an incredibly successful financial technology (fintech) company that operates behind the scenes in the payments industry. Stripe provides the application programming interfaces (APIs) that allow companies to take credit card payments through mobile and web-based applications.
Stripe’s technology allows vendors to accept payments without having to worry about anything on the backend. The APIs handle everything, and Stripe simply deposits the money – minus a small fee – into the vendor’s account.
This company is so successful that it has become the world’s first private company to reach a valuation of $100 billion. And it’s not slowing down…
Stripe just announced a new product that has profound implications for the banking industry. It is called Stripe Treasury.
Stripe Treasury is “banking as a service.” It is an API that allows any vendor using Stripe on the backend to deliver banking services to customers… without needing to get a bank charter.
This is a big move, largely because opening a bank account today is an incredibly outdated process.
Think about this – about 23% of businesses must use a fax machine in the process of setting up a business bank account today. In 2020.
And 55% of businesses must physically visit a branch to get their bank account opened.
Now, it is possible to open an online bank account today. But it takes an average of seven days to get an online account opened.
This is all ridiculous.
We live in the digital age. I haven’t touched a fax machine in two decades. And I haven’t set foot inside a bank in I don’t know how many years. The old way of banking is obsolete.
And that’s why Stripe Treasury is so attractive. It cuts through all the nonsense.
On the backend, Stripe partnered with a few banks including Goldman Sachs to provide the banking services. Stripe’s API just plugs into their banking infrastructure.
But the consumers never see this. They don’t know which bank is backing their account, or even that a bank is there at all.
And here is what this means – it enables any business to offer banking services to its customers in a way that’s cheaper, faster, and better than what the banks themselves can offer. No fax machines. No visits to the branch. No delays. Consumers can open an account instantly.
In this sense, Stripe Treasury is simplifying the whole process. The creation of Stripe Treasury relegates banks to take care of the tricky regulatory, compliance and custodial issues associated with banking.
And the companies using Stripe Treasury get to focus on their brand, services and customer experience. The banks won’t like this very much, but the customers and businesses that use Stripe Treasury will love it.
To use an analogy, it is kind of like relegating CATV companies or wireless operators to being a “dump pipe.” After all, we only need them to do well to give us a high speed internet connection. That’s all we need to be happy with their service.
Simply put, this is a brilliant product offering. And it is going to make Stripe even more valuable than what it is today.
Last month, we talked about how Uber was looking to sell its Advanced Technologies Group (ATG) – its self-driving unit. This was much to the chagrin of Japanese investors SoftBank, Toyota, and Denso. After all, they stood to lose big on the sale. And we highlighted Aurora as the most likely buyer despite it being a smaller company.
Well, that prediction just came true.
Uber sold ATG to Aurora at roughly a $4 billion valuation for $400 million and a 26% stake in Aurora. At least that is what the headlines say and what Uber would like us to believe. The reality is quite different.
After reading the fine print, Uber actually paid Aurora $400 million and received a 26% stake in Aurora at a $10 billion valuation. That’s right.
Uber received zero cash for the deal. Uber had to pay Aurora $400 million to take ATG off its hands. It received no cash in the deal and ended up with 26% of Aurora at a grossly overvalued valuation.
Uber lost more than $100 million in its ATG division in the last 12 months and was clearly desperate to get the business off its books.
As I wrote previously about this expected transaction, we expected that equity would have to be involved given that Aurora was only a $3.1 billion company with less than $500 million in cash on the books. It couldn’t afford to write a big check. Clearly, it didn’t have to.
Remember, the three Japanese companies invested in ATG at a $7.25 billion valuation. That means they took roughly a 45% haircut on the deal. And to make matters worse, at Aurora’s $10 billion valuation, they may never see any return on their investment… or it may take a very long time.
That said, I must state that I am not surprised by such a high valuation for Aurora. The electric vehicle (EV) and self-driving space has been hot recently. We have seen four different EV companies and four different light detection and ranging (lidar)-focused companies go public through special purpose acquisition companies (SPACs) this year. This has driven valuations up across the entire sector.
So we’ll keep a close eye on Aurora from here. Assuming that the company is a good steward of ATG’s technology, it could become a major player in the autonomous driving space.
Regards,
Jeff Brown
Editor, The Bleeding Edge
P.S. Once again, thanks to readers who tuned into my special presentation The Cure Event last week.
Biotechnology has been one of the hottest sectors of the market this year… and for good reason. We are witnessing a generational shift in the industry right now.
Historically, biotech was a lot more “bio” than “tech.” It’s a whole new game today, however.
The top biotech companies are utilizing bleeding-edge technology like artificial intelligence (AI), machine learning (ML), computational biology, CRISPR genetic editing, and more.
That’s why some of the best opportunities for investing in 2021 will appear in the biotech space. It’s a massive trend.
And as we discussed in my presentation, there is one small biotech company that is about to make a groundbreaking announcement. I want to make sure all my readers have this company in their portfolios before it does.
If you haven’t had a chance to catch my presentation yet, make sure to do so before the video goes offline. I’ll give you all the details on this little company, plus what I believe is the biggest story in biotech right now.
Just go right here for the replay.
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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.
