Innovation Wrap: GameStop turmoil, Clubhouse growth, and GM going electric

By Thomas Rice | More Articles by Thomas Rice

Greetings!

Here’s your wrap of the latest technology, innovation, and finance news.

đź’˛ Finance

GameStop stock has been on quite a ride — the stock rocketed up 400% last week as a stampede of retail investors (allegedly) pushed the stock up in an attempt to force short-sellers to buy back stock (allegedly), before the stock crashed 72% over the last 2 days. If you’re new to the GameStop drama, Matt Levine wrote a comprehensive summary last week (before the crash).

Keith Gill, an early investor in GameStop who goes by the online pseudonyms Roaring Kitty and DeepF***ingValue, managed to turn a $53,000 investment into $̶4̶6̶ ̶m̶i̶l̶l̶i̶o̶n̶ $̶36̶ ̶m̶i̶l̶l̶i̶o̶n̶ $22 million. He posted a very reasonable one-hour YouTube video in July 2020 that explained why he liked the stock back when the stock was at $4. It last closed at $90 after reaching a recent peak of $483. Sell-side analyst valuations range from $3.50 to $15.

While GameStop was rising, other heavily-shorted stocks were also rising (to a lesser extent) which hurt hedge fund short books in January. Melvin Capital, who was short GameStop, lost 53% for the month. The turmoil also forced a number of retail brokers to temporarily halt their customers from buying GameStop stock because the extra trading concentrated in a single name meant they were at risk of not being able to meet their clearinghouse cash collateral requirements. A retail broker at the centre of this storm, Robinhood, went on to raise $1 billion last week plus another $2.4 billion this week to meet their surging cash requirements.

🏠 Clubhouse

Clubhouse, an invite-only audio-based social networking app, is seeing explosive growth. The app added at least 1 million users added between January 30 and February 1, likely getting a boost from Elon Musk using the app to chat about Mars, Neuralink, and Dogecoin. He also interviewed Robinhood CEO Vladimir Tenev about why they stopped customers buying GameStop stock (see above).

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Clubhouse recently raised money at a $1 billion valuation after previously raising money at a $100 million valuation in May 2020. The company was founded in March 2020.

Public market investors seeking to capitalise on this growth have bought Agora (API-US) shares, which are up 89% over the past month. Clubhouse was allegedly built on top of Agora’s API.

Clubhouse Media Group (CMGR-US) shares have also seen a boost, rising 196% over the past month, despite having nothing to do with the Clubhouse app — it does have a similar name though…

🛍️ Ecommerce

Boohoo bought the Debenhams brand name out of administration for ÂŁ55m. The 242-year old UK department store brand will live on as an online-only store.

Debenhams has around 300 million visits to its website a year, making it a top 10 UK online retailer already.

Boohoo said it will rebuild and relaunch the site, opening it to third party fashion brands as a “marketplace” for fashion, beauty, sport and homeware.

In a similar offline-to-online transition, ASOS is set to buy Topshop and Miss Selfridge out of administration.

⚙️ Mobility

Driverless robotaxis from AutoX are now available in Shenzhen, China(video).

California has given Baidu a permit to test driverless vehicles on public roads in Sunnyvale, California.

According to the state Department of Motor Vehicles (DMV), as of January 27, 2021, the agency has issued Autonomous Vehicle Driverless Testing Permits to six companies: Autox Technologies, Baidu, Cruise, Nuro, Waymo and Zoox.

Starship Technologies has raised $17 million to expand its fleet of autonomous delivery robots. It recently completed one million autonomous deliveries.

Starship, which was founded in 2014 by Skype veterans Ahti Heinla and Janus Friis, offers a six-wheeled robot that packs a wealth of electronics, including nine cameras and ultrasonic sensors that afford a 360-degree view of its surroundings. The robot has a maximum speed of 10 miles per hour and is capable of recharging, crossing streets, climbing curbs, traveling at night, and operating in rain and snow without human supervision. As a precaution, a team of teleoperators monitors the robot’s progress and can take control if need be.

Starship Technologies

🔋 Electric Vehicles

General Motors has pledged to go all-electric by 2035, making it the first of the big US automakers to make that commitment.

As part of its plan, GM — maker of Buicks, Cadillacs, Chevrolets and Corvettes, among others — will manufacture about 30 types of electric vehicles. By late 2025, about 40 percent of the company’s U.S. models will be battery-powered electric vehicles, it said. And it pledged to make its factories and other facilities carbon neutral by 2040.

The Biden administration wants to go electric with the Government’s 645,000 vehicles.

Still, experts say the executive order is significant. It’s a sign that the Biden administration is serious about mitigating climate change—and that it’s committed to supporting the still-fledgling electric vehicle industry, which has collected plenty of Wall Street money but not yet convinced many Americans to buy its cars.

Harvard Business Review discussed the advantage Tesla derives from its proprietary charging network.

Yet, despite investments that add up to many billions of dollars, none of the major incumbent automakers seems to pose much of a threat to market leader Tesla, which has become nearly synonymous with EVs. This is surprising since one might reasonably have expected that once firms with annual revenues in excess of $100B, deep manufacturing expertise, and large market shares turned their attention to the electric vehicle market, the game would be up.

🛰️ Space

Astra Space, a maker of small rockets, intends to go public in the US via a SPAC transaction that would value it at $2.1 billion.

One of the features differentiating Astra from competitors is its plan to blast off weekly—and eventually daily—relying on a mobile launch system, a handful of technicians, and operations from remote locations if necessary. Bigger rockets typically have a much slower launch tempo and require significantly greater investment in ground facilities.

SpaceX plans to fly their first civilian crew to space later this year. There’s a public competition for two of the seats.

⚡ Other Snippets

MIT Technology Review launched the Green Future Index. Iceland was ranked #1 overall. Category winners were Ukraine (carbon emissions), Ethiopia (energy transition), Singapore (both green society and clean innovation), and New Zealand (climate policy).

There’s a big change at Amazon with Jeff Bezos stepping down as CEO(but he’ll remain Executive Chairman). His appointed successor, Andy Jassy, is a long-time company veteran who built and runs their AWS cloud business. The Washington Post wrote a profile on him back in September 2020.

Mice with Alzheimer’s disease may have a way to restore cognitive functionthanks to a team of neuroscientists at New York University’s Center for Neural Science (see their paper).

Currently, treatments for Alzheimer’s disease center on the reduction of phenomena linked to the affliction, such as amyloid plaque load, neurofibrillary tangles, and neuroinflammation; the Science Signaling study suggests that the addition of a pharmaceutical normalizing protein synthesis could aid in reviving normal brain activity.

Hotels are increasingly using cleaning robots armed with pathogen-zapping UV lights.

Claims about the rigor of robot cleaning routines have recently become rather surreal marketing campaigns. Take the Beverly Hilton in Beverly Hills, Calif. The iconic hotel, famous for hosting the annual Golden Globe Awards ceremony, boasts in one promotional video that its Xenex robot staff “zaps every inch before your arrival,” leaving you a “pathogen-free sanctuary” where you’ll “rest assured you’re sleeping in the safest room possible.”

Hargol FoodTech is developing a new genetic line of edible grasshoppers.

“We have raised the fifth generation of grasshoppers fed by only dry feed, which means we found a way to teach the grasshoppers to eat only dry food. We expect to implement the dry feed in our commercial farms in 2022. This will make us much more efficient than any other insect producer and even more efficient than any other animal protein producer in the world,” he continued.

Have a great week,

Thomas

Thomas Rice

About Thomas Rice

Thomas Rice is the portfolio manager for the Perpetual Global Innovation Share Fund, based in Sydney, Australia. You can find him on Twitter at @thomasrice_au.

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