Dear Reader,
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology.
Today, I’ll do my best to answer them.
But before we dive in, I’d first like to thank all the readers who tuned in for my Timed Stocks: Final Countdown presentation last night. As you saw, there’s a unique opportunity happening in the biotechnology space right now.
“Timed Stocks” offer one of the rare ways to actually achieve venture capital-like gains as a regular investor in the public markets.
As I explained last night, these tiny biotech companies go public early… and thanks to the federal government, they have a timer attached to their share price. When that timer goes off, the share price can spike, rising hundreds or even thousands of percent.
And the even more critical point I made last night is that we’re now heading into a “countdown” period for “Timed Stocks.” The profits are bigger than ever… and they’re happening quicker and more often than ever before.
If you missed last’s night’s event, there’s still time to learn more about these stocks… including the details on my No. 1 “Timed Stock” right now.
But I encourage you not to wait. Our next timer could go off as soon as March 24.
You can go right here to watch the replay of Timed Stocks: Final Countdown.
Now let’s turn to our mailbag questions…
If you have a question you’d like answered next week, please be sure you submit it right here.
Let’s begin with a question on Starlink:
A question for Jeff about Starlink. I know you get a lot of information before the crowd. Do you know if Elon has any thought about going public with Starlink? I am a big fan. Thanks.
– Terry R.
Hello, Terry. Thanks for writing in with your question.
For new readers, Starlink is SpaceX’s satellite constellation. Its goal is to create a satellite network around Earth that can provide internet access to anywhere on the planet – particularly those areas that have very limited or no good internet service providers available right now.
At present, Starlink has launched over 1,000 satellites into orbit, with an eventual goal of as many as 42,000 planned.
And it has already started rolling out its beta service. I’m currently on the list to try it out.
But does Starlink have plans to go public? The simple answer is yes.
Back in early 2020, the president and chief operating officer of SpaceX, Gwynne Shotwell, told a group of investors that Starlink was likely to spin off and go public.
SpaceX CEO Elon Musk has also signaled his interest in doing so once the business begins generating predictable cash flows.
Based on the current rate of satellite network deployment, the current performance of its beta network, and my own research on the Starlink project, my prediction is that a Starlink IPO (initial public offering) will happen within the next 18 months.
Musk has estimated that Starlink could bring in $30 billion in revenue every year once its first 12,000 satellites are launched. This would be an incredible business at that scale.
I believe Musk wants to raise additional capital or debt to help fund Starlink’s build-out. These are the same tactics that he used with Tesla.
With such tremendous revenue potential, the investment banks, private equity, and venture capital (VC) funds are going to line up.
With the prospect of a Starlink IPO, the investors have a clear exit. They can invest now and book their profits when Starlink goes public. Most VC deals typically don’t have any exit for eight to 10 years, so this is an attractive proposition.
Musk is being very strategic here. This move will help raise capital for SpaceX as well – not just Starlink. That’s critical to his plan.
Musk wants to keep SpaceX private until it launches its Falcon Heavy rocket and its Starship on a regular basis. But in order to do so, it will continue to need large injections of capital. A successful Starlink capital raise and subsequent IPO are likely part of that strategic plan…
And for investors, a publicly traded Starlink could be a very attractive investment target. We’ll be sure to keep readers posted about any news…
Next, a reader wants to know more about lab-grown organs:
Hi Jeff and friends, I understand the drive for this technological breakthrough, and I likely will invest given a place in your model portfolio.
However, I personally would choose lab-grown organs for transplantation any day over the cultivation of organ farms. I have the same view on lab-grown meat. Overall, it saves space and resources to grow for demand.
It’s like biological additive manufacturing vs. subtractive. Do you know of any companies that plan to go public in this field? I’d be highly interested in reading your thoughts on this. Thank you all for your excellent work.
– Jason A.
Hey, Jason – I commend your interest in this topic.
I believe your comments are in relation to our recent article on using genetically engineered pigs for organ transplants. This is addressing a critical need.
More than 100,000 people in the U.S. are currently waiting on organ transplants. And about 20 people die every single day because they didn’t receive an organ in time. There just aren’t enough transplantable organs available for those who need them.
One answer to this problem is xenotransplantation. That is the transplantation of cells, tissue, or organs from one species to another – typically from animals to humans. And it turns out that pig organs are in many cases the most compatible in humans.
But the human body often rejects pig organs because it detects foreign genes.
And that’s where genetically engineered pigs come into play. We can use genetic editing to make the organs acceptable for transplantation.
Most recently, we talked about eGenesis, the company founded by famed Harvard geneticist and entrepreneur George Church.
It is pioneering much of this work. It is starting with kidneys, which could be a game changer for those suffering from kidney failure. It’s also working on cells that can help treat type 1 diabetes.
It’s not the only company working in this space. At the start of this year, we wrote about an early stage company called XenoTherapeutics, which is testing skin grafts from edited pigs to treat burn victims in a Phase 1 clinical trial right now. The Food and Drug Administration (FDA) approved these genetically engineered pigs for both food and medical applications.
But I understand if some readers are a little uncomfortable with this idea or are interested in alternative solutions. The good news is that some great minds are working to provide additional options.
Back in 2019, SpaceX delivered a 3D printer to the International Space Station (ISS). The printer is called BFF, which stands for BioFabrication Facility. But BFF isn’t just any 3D printer. It uses human cells as source material to print human tissue. This is the first step toward printing functional human organs.
3D printing organs on Earth hasn’t worked well. Under gravity, the tissue isn’t stable… and it often collapses. That’s been the biggest challenge so far.
But with zero gravity, tissues will stay stable. And as of last April, the BFF successfully printed a meniscus – a piece of cartilage that acts as a shock absorber in our knee joints.
So I’m excited to see the progress made by all these bleeding-edge companies that are working to save lives.
While most of the companies working in this space are still private, Organovo is a publicly traded company that has been a pioneer in this space. Its IPO was back in 2012, and it shared the mission that you expressed.
But while there was incredible hype around Organovo between 2012 and 2014 at the thought of simply being able to print organs, reality turned out to be much different. Printing organs or tissue is extremely hard, and the company has been struggling with the science for years.
It is continually in need of additional money to fund research, with no strong revenue streams. Viscient Biosciences tried to acquire Organovo back in 2019, and that deal fell through. Then last year, Tarveda Therapeutics also tried to buy the company, and that deal also fell through.
I have not recommended Organovo, but I do keep my eye on the company.
It has recently made a shift away from the dream of printing organs. Now Organovo focuses on its physical bioprinters as a product and on developing tissue therapy for intestines.
Its goal is to submit multiple Investigational New Drug (IND) filings by 2025. This is a different strategy for the company, so we’ll see how this plays out.
My readers can be confident that I will keep up to date on this topic and share any opportunities I discover in the coming months and years.
Let’s conclude with a question about central bank digital currencies (CBDCs):
What are your thoughts on the central banks having total control of our finances? My understanding of this “new convenient currency” is that it will make it easy for them to TAKE from us because the digital currency won’t be physically in our hands.
– Sue W.
Hi, Sue, and thanks for sending in your question. We’re definitely moving in the direction of CBDCs, so this is a good topic to address.
As I wrote in my prediction series at the end of 2020, we’ve seen a lot of development in this space, especially by China.
In October of last year, we got word that the People’s Bank of China (PBC) would begin testing its CBDC in the city of Shenzhen. Around 50,000 citizens each received roughly $30 worth of China’s new digital currency for the field test.
This is a clear sign that China is on the verge of a widespread launch of its CBDC.
But what about the U.S.?
Back in February 2020, we learned that the Federal Reserve is actively investigating a digital currency. And an early draft of the COVID-19 stimulus bill even included a proposal for a U.S. digital dollar. It was ultimately scrapped from the final bill, but it demonstrates that this idea is gaining traction.
That said, I don’t think a U.S. CBDC is coming in 2021. I just have a difficult time seeing the U.S. move that quickly. But even if a CBDC isn’t launched this year, it will launch soon after. It’s inevitable.
Right now, the U.S. dollar is the world’s reserve currency. But what we’re seeing here is a radically new financial system taking shape.
China has launched its digital currency in a limited fashion. Russia also has plans to release a digital version of the ruble. If the U.S. doesn’t find a way to launch a CBDC, it risks being uncompetitive in this new world.
But the other reason why this is inevitable is because the incentives for the U.S. government – or any government, for that matter – are simply too high.
For example, a digital dollar would have made it much easier for the government to distribute stimulus funds during the pandemic. We’d simply wake up one day and see that these digital dollars had been “air-dropped” into our digital wallets.
And it would give the federal government even tighter control over the money we use.
Once a U.S. CBDC is issued, the government would certainly begin the process of removing all paper bills and coinage from the system. We’ll be told that “there’s no need for them anymore,” and that “the removal of physical currency will ‘keep us safe’ because paper money spreads germs.”
And I predict that we’ll be told after some period of time that any coins or paper dollars will no longer be accepted as legal tender in the United States.
The primary motivation of the government is to solve one simple problem. Physical cash can’t be tracked the way a CBDC could be.
A CBDC would allow the government to track and tax every transaction we ever make. The Internal Revenue Service (IRS) would have a field day. What government wouldn’t want that sort of control?
And of course, a CBDC also makes things like negative interest rates possible. The Fed could deduct interest from our digital wallets each month to encourage spending in hopes that it would stimulate the economy.
This is the most likely scenario for the government “taking” our money using a CBDC. And it is a very real concern. The simple press of a button could set higher tax rates for all CBDC distributions.
But I think an even bigger risk is that a CBDC makes it easier for a government to “print” new money.
When a country increases its debt to unsustainable levels – which we have just seen this year with the latest $1.9 trillion bill that has little to do with COVID-19 relief – and it just “prints” money to artificially manage its debt, we’ll see this shift gradually happen. And that’s when things will turn out very badly.
And if a government is not transparent with its own monetary policy and how many new units of currency it is creating, its citizens will not know that their currency is being actively devalued. Their savings will effectively erode away.
I don’t say all this to worry people, but I do share your concerns, Sue.
And given that I believe a CBDC is inevitable in the future, it’s important we’re aware of the potential downsides along with the benefits. And of course, it will be important for us to understand the investment implications in an environment like this.
Perhaps precious metals might have a future after all in that kind of environment? And if they too are not banned, high quality cryptocurrencies may also be a far better store of value.
I’ll definitely keep readers informed as we learn about any specifics that are revealed in the coming months.
That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.
Have a good weekend.
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.
