The Future is Coming Lightning Fast
SPACs, renewable energy, and dance videos. September has been packed with excitement.
Tesla Battery Day
The fall season is the time for new product releases. Major companies announce upcoming products to build customer demand. And no one does this better than Elon Musk.
First, I'm enjoying these livestream events. Even though Elon couldn't rally up the drive-in movie theater filled with Tesla's, I could feel the excitement over Twitter.
The company has been innovating in three main areas: software, manufacturing and engineering. It delivers breakthrough updates in each category every time. Even with a tiny marketing budget, the company does a wonderful job communicating with its large fanbase.
The innovation in the new car battery will increase energy storage to improve driving performance. Elon referenced the challenges with manufacturing problems at scale for new products. It is more difficult for Tesla to build the machines that manufacture physical products. This battery is no exception to this rule.
With all of these new developments, it will be remarkable to see Tesla achieve economies of scale. The current car models are too expensive for the masses but do get more affordable after every release. The best part is almost every model have similar options so anyone can enjoy the best features.
Nikola Motors has too many red flags
Speaking of electric vehicles, Nikola Motors, is under fire. A few weeks ago a major short seller research firm published a lengthy report on the company's practices. Or lack of practices. Hindenburg Research delivered a detailed report accusing the company of fraud.
On Sunday night, Nikola founder, Trevor Milton, stepped down from the chairman role. This was not a coincidence. He is under investigation and not in the capacity to manage the company's day-to-day operations. Trevor attempted to refute the claims but his argument didn't get any traction.
The SPAC market will peak after this story. The Nikola SEC investigation will surface several red flags. This will slow down every SPAC in the pipeline. The primary reason is Trevor was able to conjure up a $20 billion valuation with only concept vehicles. The company has not released a single product yet. It's truck in motion video may have been an elaborate scheme as one employee mentioned to build investor demand.
No one has Elon's charm and brains. It will be difficult for others to follow his path without his expertise. I would be careful of other energy companies attempting to raise capital based on Elon's momentum.
Oracle Acquires TikTok...or does it
Consumers run America. In the past 12 months, TikTok has become the dominant social network for young millennials and consumer brands. The company has done a terrific job differentiating itself from Instagram and Snapchat.
But the trade war with China almost stunted its growth. Last month, President Trump was planning to ban the app by September 15th if the company could solve its security concerns. A Chinese based app raised several flags for the U.S. government during this trade war. The primary concern is the security of user data. TikTok is the most popular social app at the moment so this is a valid concern.
The challenge was finding a suitable partner at the right price. When you're worth billions of dollars, there are not too many suitors available. At first it seemed Microsoft would be the ideal candidate given its lack of consumer focused applications. But at the last minute, Oracle and Walmart came to secure the deal.
At the moment, it looks like Oracle-Walmart have the bid but it hasn't been confirmed by the Chinese authorities. This transaction did happen in 30 days so I imagine there are several hurdles to cross over before it closes.
I'm not sure how I feel about this deal at the moment. Transferring the IP and protecting user rights will be difficult. Oracle will handle the database architecture and Walmart will manage the front-end [most likely focused on social ecommerce].
First, with the merger integration will stunt TikTok's growth. The TikTok teams will be focused on managing security concerns instead focusing on product development. This will give Instagram Reels and other apps a chance to catch up.
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