Artificial Intelligence

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>>> Is C3.ai Stock a Buy?


This artificial intelligence stock still has a lot to prove.


Motley Fool

by Leo Sun

Nov 17, 2021


https://www.fool.com/investing/2021/11/17/is-c3ai-stock-a-buy/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Key Points

C3.ai experienced a severe slowdown during the pandemic.

It expects its growth to accelerate again as those headwinds pass.

The stock looks much more reasonably valued than it did in late 2020, but it still can’t be considered a bargain.


C3.ai (NYSE:AI) has burned a lot of investors since its initial public offering (IPO) last December. The artificial intelligence software company went public at $42 per share, started trading at $100, and hit an all-time high of $183.90 right before Christmas.

However, C3.ai's stock price subsequently dropped back to the high $40s as its revenue growth stalled out. But should investors consider buying this former Wall Street darling ahead of its next earnings report on Dec. 1?

What happened to C3.ai?

C3.ai develops AI algorithms, which can either be plugged into a company's existing software applications or accessed as pre-built cloud services. These algorithms can help large companies streamline their supply chains, improve their safety, cut costs, detect fraud, and make other data-driven decisions.

C3.ai initially gained a lot of attention for two reasons. First, it was founded by Thomas Siebel, who previously co-founded Siebel Systems and oversaw its $5.85 billion sale to Oracle in 2006.

Second, C3.ai was growing like a weed. Its revenue surged 88% in 2018, 48% in 2019, and 71% to $157 million in fiscal 2020, which ended last April.

Why did C3.ai lose its luster?

C3.ai initially dazzled investors with its explosive growth rates, but it generated most of its revenue from large industrial and energy companies. Pandemic-related disruptions to those sectors throttled its growth in fiscal 2021, and its revenue rose just 17% to $183 million.

C3.ai's number of customers increased 82% to 89 in 2021, but its average contract value dropped from $12.1 million to $7.2 million. The company claims that reduction is intentional, since it wants to reduce its dependence on large "elephant" clients, but that decline is throttling its top-line growth.

Its gross margin rose by a percentage point to 76% in fiscal 2021, but its net loss only narrowed slightly, from $69 million to $56 million. Its slowing growth, red ink, and frothy valuation -- which surpassed 80 times its fiscal 2020 revenue last December -- caused the stock to lose some luster.

But is C3.ai's business stabilizing?

In the first quarter of fiscal 2022, C3.ai's revenue rose 29% year over year to $52 million. Its number of customers rose 85% to 98, but its average contract value declined again to just $4.5 million.

Its gross margin increased from 74% to 75%, but it remained unprofitable with a net loss of $37 million -- compared to a slim profit a year earlier.

For the full year, C3.ai expects its revenue to increase 33%-35% as the pandemic-related headwinds fade. It also expects new partnerships -- including a co-selling agreement with Alphabet's Google Cloud and an AI development partnership with Snowflake -- to boost its sales.

However, C3.ai still expects its adjusted operating loss to roughly triple to $107-$119 million this year as it ramps up its investments again.

Is C3.ai's stock still overvalued?

C3.ai's stock still isn't cheap at 20 times this year's sales, but that price-to-sales ratio looks a lot healthier than its nosebleed valuations last December. It could also be justified if C3.ai exceeds analysts' expectations for 34% sales growth in both fiscal 2022 and 2023.

By comparison, Palantir (NYSE:PLTR), which collects and analyzes data for government agencies and large companies, still trades at 30 times this year's sales. It expects its revenue to rise 40% this year.

Datadog (NASDAQ:DDOG), which helps IT professionals oversee a company's infrastructure on unified dashboards, expects its revenue to rise 65% this year. Its stock trades at about 60 times that estimate.

Therefore, C3.ai's stock isn't terribly overvalued anymore -- but there's still a lot of optimism baked into its valuations.

Should you buy C3.ai before its second-quarter earnings?

C3.ai might surprise investors with a big earnings beat in December, but any sign of weakness could spark an ugly sell-off in this wobbly market.

I'd wait for C3.ai to post its earnings report in early December and see if its gross margins are still expanding, if its contract values are stabilizing, and if it maintains or boosts its full-year guidance before buying the stock. Until then, I'd prefer to stick with other high-growth stocks to profit from the booming AI market.

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>>> C3.ai Could Surge Given Huge Short Interest and Improving Outlook


Investor Place

by Ian Bezek

November 11, 2021


https://finance.yahoo.com/news/c3-ai-could-surge-given-163602521.html


C3.ai (NYSE:AI) has had a seriously underwhelming 2021; AI stock has dropped more than 60% year-to-date. That said, most of the damage was done in the spring, when shares tumbled from $120 to $50. Since then, AI stock has moved in a trading range as investors wait for new developments from the firm to reset the narrative.

Over the past couple of weeks, however, AI stock has started to show some signs of life; shares have advanced from $44 to $52. We’ll get to why sentiment is turning in a moment. However, first, it’s worth understanding the company’s founder and CEO, Tom Siebel, and how he has positioned C3.ai for success.

A Bet on the Jockey

There’s an investing idea called betting on the jockey. In a newly-emerging industry, it can be hard to handicap which of the companies has the best technology. Everything is evolving so quickly in artificial intelligence (AI) right now. So instead of making a thesis based on the best software today, instead you pick the best management team. Don’t bet the horse, bet on the person riding the horse.

Tom Siebel is the perfect person to be leading C3.ai right now. Siebel graduated from the University of Illinois with his graduate work in databases, and immediately went to work for Oracle (NASDAQ:ORCL) in the early 1980s. At the time, no one had any idea Oracle would end up being the behemoth that it later became; Siebel was among Oracle’s first two dozen employees.

Siebel worked at Oracle for a decade and helped make them one of the global leaders in databases. However, Siebel wanted to launch a database program focused on sales. Oracle wasn’t sold on the idea. So Siebel set out on his own, founding Siebel Systems. Siebel was the first big player in what is now known as customer relations management (CRM) software. This was one of the fastest-growing application software companies of all time; Siebel founded it in 1993 and by 2000 it was doing $2 billion a year in revenues.

Ultimately, Oracle realized the error of its ways in letting Siebel leave. Oracle ended up having to acquire Siebel Systems for $5.8 billion. After that, Siebel founded his next company: C3.ai.

Building the AI Industry

After Siebel left Siebel Systems, he took time to think about the next big opportunity. He had practically invented the CRM niche, and Siebel Systems remained the industry leader there at the time of its sale to Oracle. He concluded that artificial intelligence would be the next big thing, and C3.ai came into existence.

Initially, C3.ai focused on industrial enterprise AI applications in specific fields such as energy. Over time, however, C3.ai has broadened its platform. The company is now the global leader in providing Enterprise AI. It has 40 different applications for industries spanning manufacturing, telecommunications, utilities, and aerospace in addition to the company’s original oil and gas niche.

Why This Matters Now

This sort of big data analysis and optimization is absolutely essential going forward. Just look at the supply chain crisis now. Companies can’t even guarantee that they’ll get basic inputs for their factories. As such, it’s increasingly vital to use existing resources to their fullest. Any sort of software that can reduce waste and improve throughput is more crucial than ever.

That’s not all. The focus on environmental, social, and governance (ESG) investing has put efficiency in the forefront. Companies need to reduce their carbon footprints to remain on the right side with investors. Industries such as chemicals, refining, and manufacturing use tremendous amounts of energy and potentially toxic compounds. To the extent that AI and intelligent software can optimize these processes, it makes a big difference in mitigating a dirty industry’s environmental impact.

AI Stock Verdict

C3.ai has had a difficult 2021. This came in big part because of Covid-19. C3.ai on average has huge contracts with clients; think millions of dollars each on many occasions. The contract with Baker Hughes (NYSE:BKR), for example, is for hundreds of millions of dollars just on its own. This isn’t the sort of software that a business would order over a video call during the pandemic.

C3.ai, understandably, had a sales slowdown given that its sales people couldn’t travel to pitch the product in-person. That should start to lift soon, as things return toward normal. That said, C3.ai has been slower in announcing new contracts this year than analysts had hoped for. If that persists, it will be a negative for the growth story going forward.

Still, Tom Siebel has navigated other big industry busts, such as the hangover following the 1999 tech bubble. There’s no reason to think that he can’t get C3.ai back into a hypergrowth phase once the current disruption ends. In the meantime, AI stock has a noteworthy 13% short interest right now. That could set off a major squeeze on positive earnings or any big new contract announcements.

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>>> Cathie Wood just called this technology the 'next big frontier' with a market opportunity of $80 trillion — here are 3 easy ways to invest in it


Yahoo Finance

by Jing Pan

November 13, 2021


https://finance.yahoo.com/news/cathie-wood-just-called-technology-140000074.html


Cathie Wood just called this technology the 'next big frontier' with a market opportunity of $80 trillion — here are 3 easy ways to invest in it

Cathie Wood believes that she’s found the next big thing in investing — and has the data to back it up.

“We were assuming that in the next 10 years, artificial intelligence would deliver, in the enterprise software space, a market cap opportunity of $30 trillion,” the star stockpicker said at a Milken Institute conference last month. “Our new number is $80 trillion.”

"We think that is the big new frontier.”

Wood knows a thing or two about investing in the frontier of technology.

Despite recent turbulence, her flagship fund ARK Innovation ETF has delivered a total return of 472% over the last five years, substantially outperforming the S&P 500 over the same period. So it’s probably a good idea to follow Wood’s lead and at least take look at the AI space.

Here are three attractive AI plays in today’s market — one of them could be worth purchasing with some of your spare change.

Nvidia (NVDA)

Nvidia’s graphics processing units have long been a favorite among video game enthusiasts. But the company’s capabilities extend far beyond the gaming market.

For instance, its “system on a chip” solutions are widely used in mobile computing and automotive markets.

The Santa Clara-based chipmaker believes it can play a crucial role in driving enterprise adoption of AI as well.

“[W]e’re ready to democratize AI, and we’re ready to make this thing usable by every enterprise customer,” said Nvidia’s head of enterprise computing Manuvir Das earlier this year.

Business, in general, is firing on all cylinders at Nvidia. In Q2 of its fiscal 2022, revenue surged 68% year over year and 15% sequentially.

Unsurprisingly, the stock has been a market darling. Nvidia shares are up 124% in 2021 and are now priced at over $300.

Alphabet (GOOGL)

Google’s parent company Alphabet is a massive tech conglomerate commanding a market of nearly $2 trillion.

And it’s not going to miss out on AI.

In fact, AI is already deeply integrated into the company’s product lineup. Whenever you search for something in Google, AI tries to find out exactly what you’re searching for and deliver results based on what it knows about you.

Alphabet also owns autonomous driving technology company Waymo. Last year, Waymo launched its fully automated, robo-taxi service in Phoenix.

Most recently, Alphabet announced the creation of a new subsidiary — Isomorphic Laboratories — which will use AI methods for drug delivery. It’s built off of the work done by Alphabet’s AI subsidiary DeepMind.

After a nearly 70% climb year to date, Google now trades at over $2,900 per share.

But you’d don’t have to start big. These days, you can build your own AI portfolio just by using digital nickels and dimes.

C3.ai (AI)

With a market cap of $4.9 billion, C3.ai is small potatoes compared to Nvidia and Alphabet. But if you believe in Wood’s AI market projections, this stock shouldn’t be ignored.

The company is so focused on the technology that it not only has AI in its name, but has also claimed “AI” as its stock symbol.

C3.ai is an enterprise AI software provider, generating the bulk of its money from subscriptions sold to businesses from a wide range of industries.

And subscriptions translate into recurring revenue — something that should make any investor smile.

In Q1 of its fiscal 2022, the company’s subscription revenue rose 29% year over year to $46.1 million. Total revenue came in at $52.4 million, also up 29%.

At quarter-end, C3.ai’s total enterprise AI customer count stood at 98, representing an 85% increase year over year.

The stock’s performance, though, has been less than rosy. C3.ai shares are down more than 65% in 2021, giving contrarian tech traders something to think about.

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>>> Big Teacher Is Watching: How AI Spyware Took Over Schools


The pandemic caused schools to embrace laptops, tablets, Zoom, and an app called GoGuardian that tracks everything students (and, sometimes, parents) do online.


Bloomberg

October 28, 2021


https://www.bloomberg.com/news/features/2021-10-28/how-goguardian-ai-spyware-took-over-schools-student-devices-during-covid


At Pekin Community High School, the teachers are something close to omniscient. Education, even in-person education, is digital in the Covid-19 era, and staff members use a piece of software to watch everything students do on school-issued laptops and to keep them off banned websites. The kids are aware. “They pretty much know that they’re being monitored 24/7,” says Cynthia Hinderliter, head of technology at the school outside Peoria, Ill.

Still, class clowns persist. Hinderliter pulls up a detailed dashboard of student online activity, which reveals the identities of rule breakers. A yellow “EXPLICIT” label appears beside the name of a youngster who had typed “sexy girls” and “sugar daddy dating” into Google. Other students were searching YouTube for videos of a farming simulation game, guitar tutorials, and, for some reason, nursery rhymes about trucks. Another popular search: “How you bypass GoGuardian,” which is the name of the tracking software Pekin High uses. GoGuardian has been around since 2014, but the pandemic gave educators new reasons to adopt it. The software is quickly becoming almost as commonplace inside American classrooms as standardized tests.

Even as schools throughout the U.S. have opened back up for full in-person instruction, they’ve generally kept the technologies they picked up during the unending months of Zoom lessons. This includes laptops and tablets, which some schools were already using before Covid, as well as apps that allow students to attend classes while they are quarantining after an illness or a potential exposure and software to allow educators to keep tabs on them.

For kids that means their every keystroke, click, and search is recorded and analyzed by companies such as GoGuardian, which is based in Los Angeles. Its competitors include Gaggle.Net, Securly, and Bark Technologies. In addition to monitoring and website filtering, GoGuardian sells software tools for classroom management, video calling, and network security. Its most futuristic offering, Beacon, is an artificial intelligence feature the company claims can identify students who, based on their online behavior, are at risk of hurting themselves or others. Advait Shinde, GoGuardian’s chief executive officer, says his company plans to offer software for “classwork, homework, exams”—every aspect of primary and secondary school. “We haven’t fully realized what technology can do.” He imagines computer systems that recommend assignments and offer personalized curricula based on data GoGuardian collects. This summer he raised $200 million, valuing Liminex Inc. (the company’s official name) at more than $1 billion.

Earlier this year, GoGuardian struck deals with state education departments in Delaware and West Virginia, which will give every school in both states access to the software. New York City, the nation’s largest district, recently signed a similar contract with the company, bringing GoGuardian’s potential reach to more than 23 million students. Some parents and privacy groups find the use of tracking software inside classrooms to be disturbing, but many school administrators (and many parents, for that matter) seem to regard those concerns as overblown. Schoolkids already turn over personal data to big companies when they mindlessly scroll through TikTok and Instagram, and surveillance in schools has been around for as long as there have been hall monitors. “I’ve always felt that they’re already being tracked,” says Pekin High’s principal, Joel Schmieg. Administrators at another GoGuardian customer—Success Academy, the large New York charter school network renowned (or infamous) for harsh discipline—say they hear demands from parents for more internet filtering, not less.

Even if most educators believe that students should be monitored when they’re using computers, there’s far less clarity about what computers mean for the future of learning. For years, Silicon Valley has tried to leave its distinctive mark on education, but most attempts have failed. Massive open online courses, or MOOCs, haven’t been the game changer for higher education that futurists and TED talkers once described. Mark Zuckerberg’s $100 million effort to remake the school system in Newark, N.J., led to allegations of corruption along with limited evidence of improvement. AltSchool, an education company backed by Zuckerberg and top venture capital firms and founded by former Google executives, started closing its 3D-printer-equipped classrooms in 2017 and got out of the business of operating schools entirely in 2019.

Will this latest Silicon Valley foray into education end any differently? GoGuardian and similar apps were rushed into schools during the pandemic. Teachers like the apps, students accept them, and they even play in Peoria—or just outside it, anyway. But no one actually knows how well, or even if, these technologies work.

In 2013, President Barack Obama unveiled ConnectEd, an initiative calling on schools to embrace the internet era and to give students cheap computers. Soon, iPads and Chromebooks started pouring into classrooms, and Shinde, then a programmer at Google, sensed an opportunity. He quit his job and, working with two acquaintances, created a browser widget called Laptop Lookout. It was supposed to help schools hunt down kids’ lost devices. Their pitch didn’t take, but it gave him a new idea.

“This stuff is great and all,” Shinde recalls hearing when he talked to teachers. “But I’m having trouble keeping my kids from watching Netflix in class.” After unleashing the internet in classrooms, schools were desperate for ways to control it. The trio reworked their spiel into one for a web-censoring widget called GoGuardian. Rather than blocking entire websites—an approach that many corporate IT departments take to control what employees do on their work computers—the system they developed claimed to analyze text and pixels on each website to filter out only those deemed inappropriate or unwanted. So, in theory, teachers could send kids to Reddit and YouTube without worrying they might wander down distracting or darker paths. “You end up blocking much less,” Shinde says. Schools would pay a per-student fee (now around $5) for each GoGuardian product they used. GoGuardian raised $5 million in seed funding in 2015 and saw encouraging if unspectacular growth in its early years. In 2018 private equity firm Sumeru Equity Partners LP bought most of the company for an undisclosed price, and Shinde’s co-founders left, leaving him in charge.

Shinde has no background in education, nor, at age 31, is he a parent—“not yet,” he says. But he’s won fans in the field simply by being more agreeable than the average tech bro. Many Silicon Valley executives selling products to schools “model themselves after Steve Jobs: ‘I know best,’?” says Tony Miller, a deputy secretary of education under Obama. Shinde met Miller in 2018 and recruited him to GoGuardian’s board. Shinde “had a real vision for improving education that was less about technology and more about its benefit,” Miller says.

The pandemic gave Shinde’s pitch urgency. He sweetened the deal by offering GoGuardian software for free on a trial basis to any school that wanted it. Teachers can see students browsing the web in real time. “It’s like the teacher is there with them,” says Marshall Beyer, education technology coordinator for the Turlock Unified School District in California’s Central Valley, where GoGuardian tracks roughly 14,000 students. If a kid is playing a video game instead of working, the teacher can commandeer the screen and force-quit the game. There are Reddit threads from teachers cataloging student Googling, ranging from the banal (photos of potatoes) to the discomfiting (“cat poop” and “how much does horse semen cost”).

More than 1,000 schools signed up for free trials in the spring of 2020, and some of those paid for accounts at the end of the school year. In some cases new customers used federal Covid relief funds for the purchase. That fueled whiplash growth for GoGuardian: Since March 2020 the company has added 253 employees, bringing its total to about 480, and Shinde acquired two other ed-tech startups.

The schools—not GoGuardian—decide what to block on kids’ computers, though this isn’t always clear to pupils. Precocious seventh graders once emailed Shinde to complain that their district in New Jersey had blocked the New York Times but let right-wing outlets such as Breitbart News slide. The seventh graders blamed Shinde. He set up a video call to explain to the students that GoGuardian didn’t make filtering decisions and suggested they lobby their administrators. He hasn’t heard from them since. “From our perspective,” he says, “we’re not in a position to say what’s right or wrong.”

Pekin High was flooded with alerts and “kids searching for problematic stuff,” Hinderliter says. “Problematic would be porn”

Pekin is a blue-collar town. Its public high school sits next to a strip mall with a Pizza Hut and a nail salon and is 1 mile from a park that claims to have the “world’s greatest sundial.” (It isn’t the tallest sundial in the world, or even in the country, but it does have informative plaques about the solar system, and there’s a lagoon nearby.)

Pekin High signed up for GoGuardian three years ago, after doling out bare-bones Acer Chromebooks to its 1,800 students. Every summer the school gives graduates a chance to keep their computers (for $25 each) and orders a fresh batch of 500. With the help of a few members of the school staff, Hinderliter sets up each laptop, which comes equipped with only a web browser, adding some library and math programs, and a software widget for recording online lessons.

On the computer at her desk, nestled in a corner of the school library, Hinderliter is already logged in to GoGuardian. She opens a dashboard labeled “Fleet” and pulls up a digital map, revealing the location of each laptop. “This one says that it’s 6 miles away,” she says, pointing to the screen. It’s summer vacation, so the student is online at home. “That’s very useful when we have a stolen Chromebook.”

It’s taken a while for Hinderliter and her team to figure out what to do with all the intel pouring in. After first introducing GoGuardian, Pekin High was flooded with alerts and “kids searching for problematic stuff,” she says. “Problematic would be porn.” Her philosophy is fairly liberal. A few questionable Google queries won’t result in any discipline, though she calls students to her desk to warn them not to cross lines on a school laptop. “We don’t have the time or the staff to monitor every little thing they do,” she says.

Repeat offenders are put in what she calls “the penalty box”—a virtual form of detention that locks them out of anything unrelated to schoolwork. Hinderliter clicks on the search history of the sophomore recently busted for Googling “sexy girls,” unfurling a string of time stamps and other naughty terms. Hinderliter is letting it go for now but is keeping an eye on him in case he continues to look for adult content. “For an entire semester, we might have a kid in the penalty box,” she says. Hinderliter says she also has to remind at least one student each year not to send love letters through school email accounts.

For teachers, GoGuardian’s classroom tools are the major attraction. Riley Faille, a Pekin math teacher, says she logs in to GoGuardian from the laptop on her desk when she’s teaching so she can limit what students have open on their screens to only what she wants—a calculator or exam, for instance. During study halls she uses the software to watch what the students are doing. If someone strays from homework, she’ll open a tab on their screen and type GoDoYourWork.com. “I like stuff like that,” she says. She considers it a gentle way to remind them “Oh, I shouldn’t be doing this right now.”

At the end of each class, Faille gets a report with pie charts summarizing what students were doing on their laptops, which helps her see if they missed something while she was teaching. But on days when students are home because they’re sick or quarantining, she finds GoGuardian less useful. Last year, Pekin split kids into two cohorts, with each coming in every other day. On work-from-home days, students were free to set their own schedules. When kids were in class in person, Faille blocked sites such as YouTube, but she couldn’t limit YouTube usage for students at home because they might need access to online videos for their Spanish or French assignments.

No matter where kids are, Hinderliter watches GoGuardian closely every day. Almost half of Pekin’s high schoolers receive free or reduced lunch, and many take after-school jobs. During the pandemic, Hinderliter watched bills get paid and unemployment forms get filled out on student laptops, knowing that her kids’ Chromebooks were often the only computers at home.

Sometimes she saw more troubling indicators. Around dinnertime on a Thursday earlier this year, Hinderliter received a panicked alert. A student had Googled “How to tell your girlfriend if you’re suicidal.” Hinderliter and three other administrators sprang to action in a text thread, so that a school official could call the student’s home and alert a guidance counselor. Hinderliter declines to share details, other than to say that the student was ultimately all right.

Schmieg, the principal, says GoGuardian can help catch a slip in a student’s mental health well before teachers, counselors, or loved ones might notice. He says he has called parents, finding them entirely unaware that their child is in distress. “That’s happened multiple times in the past year,” he recalls.

This school year, Pekin began using Beacon, which automates the process of alerting administrators about students the software deems most at risk. Schmieg says he received more than 40 alerts in the first week on the service. With each alert, the software created a report of the student’s online activity, so he and school staff wouldn’t have to dig through their search history to try to figure out what was going on. “I already love it,” he says.

GoGuardian began testing Beacon back in 2018, but, like most of what the company offers, the service exploded in popularity after schools closed in March 2020. Last year, Clark County, an enormous district that includes Las Vegas, started using Beacon and saw more than 7,300 alerts, acting on almost a third of those. GoGuardian has promoted the new service as a way to combat the psychological strain students have faced during the pandemic. Shinde says the company “could be in a position to shine a flashlight on this issue.”

But some parents and privacy groups consider Beacon to be emblematic of larger problems with GoGuardian’s approach, which they characterize as unnecessary snooping that might actually be contributing to the psychological strain it’s supposed to mitigate. “We were teenagers, right?” says Geoff Shandler, a parent in Montclair, N.J., whose school system tested out GoGuardian. “You shut your door when you’re in your room. I don’t think anyone liked the idea of being watched and tracked.”

Shandler is a book editor, with three children in public schools (ages 8, 14, and 16). In February, in a weekly note to families, his district’s superintendent said Montclair was using GoGuardian in several classrooms. Parents in the left-leaning suburb freaked, which prompted local news coverage and an online petition. Part of the concern came because the district said GoGuardian’s filtering would be active whenever kids were logged in to their school accounts—whether that’s on school laptops or computers at home. (GoGuardian says schools choose whether to turn on the function that allows filtering on home computers and declined to share how many have opted to do so.) In Berkeley the public school district paused its rollout of GoGuardian last year after a similar outcry. Students “feel like they don’t have any space to themselves,” a sophomore complained to the school paper.

In October a trio of Democratic senators sent letters to GoGuardian and three of its competitors chiding them for surveilling students and “compounding racial disparities” that already exist in school discipline. “We need to protect our students from the long-lasting and harmful effects these invasions of privacy may have,” Massachusetts Senator Elizabeth Warren wrote in a statement to Bloomberg Businessweek. GoGuardian said in a statement that the company cares “deeply about keeping students safe and protecting their privacy.”

The company gives schools handouts that purport to explain how the technology works. Montclair’s schools tried addressing parents’ concerns, but Shandler found the information confusing. He felt that GoGuardian’s claims, particularly those about identifying students in danger, lacked supporting evidence. In a message to parents, Montclair Superintendent Jonathan Ponds wrote, “It may be helpful to know that 10,000 other schools, including our neighbors?…?use GoGuardian.”

Critics describe GoGuardian’s technology as a black box. Jonathan Singer, the former president of the American Association of Suicidology, says he worries that schools are deploying tools such as GoGuardian’s without empirical evidence of their impact on mental health or an understanding of the algorithms at play. “There has to be some public involvement in what the software is doing,” he says. While developing Beacon, a GoGuardian spokesman said the company had spoken with several experts, including Singer. Although Singer acknowledges he walked the company’s staff through his research, he says that was the extent of his involvement with Beacon. “I don’t really even know how it works.”

Schools, swamped by debates about reopening and testing and mask mandates, haven’t had much time to address these questions. As Delaware prepares to introduce GoGuardian into its schools, Alyssa Moore, the state official coordinating the rollout, says the education department hasn’t rigorously tested Beacon’s effectiveness and may not have a chance to prior to offering it to schools. “I need to get this system up and running before I do anything else,” she says.

When a school sets up Beacon, GoGuardian’s machine-learning models crunch everything students type and visit. According to Shinde, these systems can detect whether a post has “general suicide ideation” or is a true “high-stakes alert.” GoGuardian has a support team available around-the-clock to sift through machine alerts on behalf of schools that don’t have the staff or the inclination to do it themselves, giving the company more responsibility over how incidents are handled. When staffers review an alert and deem it serious, they call the school. Shinde says GoGuardian’s goal is to make sure a school is aware of the issue, but “ultimately that’s it. We want them to take the next action.” GoGuardian declined to say how many people are on the team, calling that figure proprietary. The company says it changes the number of its round-the-clock staff based on demand.

GoGuardian, like many other tech companies, declines to disclose the specifics of how its algorithms make determinations. Shinde says GoGuardian complies with all federal laws on student data and privacy. If police are brought in to investigate an alert, GoGuardian allows schools to decide what data to share. And the company contends that Beacon is effective. “We have customers who literally say, ‘There’s kids alive today that wouldn’t be alive without a tool like Beacon,’?” Shinde says. “So from an evidence perspective, that’s what we truly hang our hat on.”

Some of GoGuardian’s competitors are going further, selling services that scrape student searches, keystrokes, and social media posts in an attempt to read their minds and ferret out feelings of anger or harm. GoGuardian so far has steered clear of this type of so-called sentiment analysis. Having a computer play child psychologist isn’t realistic, Shinde says. Technology just doesn’t work well enough to do that reliably. But, he adds, “we’re certainly open to expanding to it one day.”

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>>> Ex-Gen. Stanley McChrystal: AI weapons ‘frightening,’ ‘will’ make lethal decisions


Yahoo Finance

by Max Zahn with Andy Serwer

October 15, 2021


https://finance.yahoo.com/news/ex-gen-stanley-mc-chrystal-ai-weapons-frightening-will-make-lethal-decisions-134254328.html


The chief software officer at the Pentagon, Nicolas Chaillan, suddenly quit last month over concerns that the U.S. military had fallen "15 to 20 years" behind China in cyber warfare and artificial intelligence, he told the Financial Times.

The warning marks the latest sign of discord within the U.S. military over how to prepare for what former Google executive Kai-Fu Lee calls the "third revolution" in warfare, after gunpowder and nuclear arms.

In a new interview, ex-General Stanley McChrystal — who led coalition forces in Afghanistan for two years and now heads a consulting firm called the McChrystal Group — said artificial intelligence will inevitably come to make lethal decisions on the battlefield. However, he acknowledged the "frightening" risks of potential malfunction or mistake.

"People say, 'We'll never give control over lethal strike to artificial intelligence,'" says McChrystal, who recently co-authored a book entitled, "Risk: A User's Guide." "That's wrong. We absolutely will."

"Because at a certain point, you can't respond fast enough, unless you do that," he adds. "A hypervelocity missile, hypersonic missile coming at the United States aircraft carrier, you don't have time for individuals to do the tracking, you don't have time for senior leaders to be in the decision loop, or you won't be able to engage the missile."

A ban on autonomous weapons has drawn support from 30 countries, though an in-depth report commissioned by Congress advised the U.S. to oppose a ban, since it could prevent the country from using weapons already in its possession.

In 2015, prominent figures in tech like Tesla (TSLA) CEO Elon Musk and Apple (AAPL) co-founder Steve Wozniak, as well as thousands of AI researchers, signed an open letter calling for a ban on such weapons.

President Joe Biden, speaking at a summit of U.S. and European leaders in February, called for international collaboration to "shape the rules that will govern the advance of technology and the norms of behavior in cyberspace, artificial intelligence, biotechnology so that they are used to lift people up, not used to pin them down.”

The increasingly sped-up pace of warfare will require U.S. military officers to cede decision-making power to artificial intelligence, McChrystal said. But that brings risks, he noted.

"You've created technology, you put in processes for it to operate, but then to operate at the speed of war you're essentially turning it on and trusting it," he says.

"That can be pretty frightening, particularly if the potential of malfunction or spoofing or any of those other things are in," he adds.

McChrystal, who graduated from the U.S. Military Academy at West Point in 1976, served a 34-year military career that included a stint as the commander of U.S. special forces and ultimately, a two-year tenure as the head of coalition forces in Afghanistan that ended in 2010.

Then-president Barack Obama accepted McChrystal's resignation days after a Rolling Stone article in which McChrystal and aides criticized senior administration officials.

Speaking to Yahoo Finance, McChrystal warned in general of the power taken up by AI systems when organizations do not fully understand their capabilities.

"It's hard to have a complete understanding of, in a modern organization now, what decisions are actually being made algorithmically and what are being made by people," he says.

"When you don't have that, I would argue you have the risk of no longer having real understanding of control of your organizations," he adds.

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>>> Palantir Technologies Inc. (PLTR) builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations. The company provides Palantir Gotham, a software platform for government operatives in the defense and intelligence sectors, which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform. It also offers Palantir Foundry, a platform that transforms the ways organizations operate by creating a central operating system for their data; and allows individual users to integrate and analyze the data they need in one place. Palantir Technologies Inc. was founded in 2003 and is headquartered in Denver, Colorado.

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>>> TCW Artificial Intelligence Equity Fund (TGFTX) -


https://money.usnews.com/funds/mutual-funds/technology/tcw-artificial-intelligence-equity-fd/tgftx


About TGFTX

The investment seeks long-term capital appreciation. The fund normally invests at least 80% of the value of its net assets, plus any borrowings for investment purposes, in publicly traded equity securities of businesses that the portfolio managers believe are benefitting from or have the potential to benefit from advances in the use of artificial intelligence. It invests primarily in issuers that are characterized as "growth companies" according to criteria established by the portfolio managers, which may include attributes such as an expected growth cycle, accelerating earnings or cash flow, and general growth of a business sector. It is non-diversified.

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>>> Artificial Intelligence Stocks To Buy And Watch: Tesla Touts AI Capabilities Beyond Electric Vehicles


Investor's Business Daily

by REINHARDT KRAUSE

08/20/2021


https://www.investors.com/news/technology/artificial-intelligence-stocks/


Artificial intelligence stocks are rarer than you might think. Many companies tout AI technology initiatives and machine learning. But there really are few — if any — public, pure-play artificial intelligence stocks.

In general, look for companies using AI technology to improve products or gain a strategic edge.

Electric-vehicle maker Tesla (TSLA) at an AI day on Aug. 19 showcased plans to expand into humanoid robots. The robots will draw upon AI technology used in driver-assistance systems, Tesla said. Tesla also strutted out a new AI computer chip.

Nvidia (NVDA) is the leading provider of AI chips for cloud computing and other applications. Nvidia reported second-quarter earnings that topped views and was featured as the IBD Stock of the Day.

Google-parent Alphabet (GOOGL) rates a buy because of "artificial intelligence/machine learning advantages across the product stack," said Bank of America in a July 28 report.

AI tools, for example, are playing a big role in Facebook's (FB) expansion of shopping experiences, including Instagram and WhatsApp.

Look for Apple stock to get a boost from smart wireless earphones, says UBS analyst Jimmy Yu. He expects big upside for Apple (AAPL) from smart wireless earphones using artificial intelligence software.

"The smartification of wireless earphones is just beginning," he said in a report. Yu said earphones are unlikely to become a standalone smart device and will likely continue to rely on a smartphone's computing power and installed apps. However, earphones will be equipped with more sensors.

Apple Stock Boost From Smarter Wireless Earphones?

"Smart wireless earphones have the potential to materially improve voice-recognition accuracy; collect consumer biometric data that can be used for high-end AI algorithm training and inference; and broaden the range of applications," he said in a report.

Microsoft (MSFT) on April 12 acquired speech recognition software maker Nuance Communications (NUAN), whose artificial intelligence tools are widely used in the health care market. Microsoft aims to deliver Nuance AI tools to health care customers via its Azure cloud computing platform.

Redmond, Wash.-based Microsoft agreed to pay $56 per share for Nuance in the $16 billion deal.

Applied Materials (AMAT) in March rolled out a new optical inspection system, called ExtractAI, to detect chip defects by using AI software. AMAT stock owns a Relative Strength Rating of 90 out of a best possible 99, according to IBD Stock Check-up.

Artificial Intelligence Stocks: Top VC Investors

The top AI stocks to buy spans from chip makers, enterprise software companies and on to technology giants that utilize AI tools in many applications. Think of cloud computing giants Amazon.com (AMZN), Microsoft and Google.

Microsoft belongs to the IBD Leaderboard as well as Nvidia, ServiceNow (NOW), cybersecurity firm CrowdStrike Holdings (CRWD) and Google stock. Further, the Leaderboard is IBD's curated list of leading stocks that stand out on technical and fundamental metrics.

Chip maker Nvidia aims to "democratize" AI across all industries and fields of research.

Intel Capital, the venture arm of Intel (INTC), in 2020 retained its No. 1 ranking for investments in AI startups, according to research firm CB Insights. Qualcomm (QCOM) joined the top five list for the first time.

Meanwhile, more AI companies are launching initial public offerings, such as Palantir (PLTR) and C3.ai (AI).

Worldwide revenues for artificial intelligence software, hardware and services will grow over 16% annually from 2021 to 2025 to reach $327.5 billion, forecasts International Data Corp.

Meanwhile, 71% of smartphones sold globally in 2021 will feature AI software for power optimization, imaging, virtual assistants and to improve device performance, forecasts Strategy Analytics. That's up from 54% last year.

All AI software needs computing power to find patterns and make inferences from large quantities of data. The race is on to build AI chips for data centers, self-driving cars, robotics, smartphones, drones and other devices.

AI Stocks: Chip Market To Hit $70 Billion By 2025

The worldwide AI semiconductor market will grow to more than $70 billion by 2025, up from $23 billion in 2020, forecasts research firm Gartner.

Nvidia in September 2020 agreed to buy Arm Holdings from Softbank for $40 billion. Analysts say Nvidia aims to accelerate the artificial intelligence processing capabilities of ARM chips.

Further, AI chipmaker Graphcore recently raised $222 million at a $2.77 billion valuation. SambaNova is another high momentum AI competitor, says Mizuho Securities.

Amazon Web Services, the cloud unit of Amazon, recently said it would offer Intel's Habana AI chips to its customers. Intel in late 2019 acquired Israel-based Habana Labs for $2 billion.

At its virtual re:Invent conference in December, AWS claimed to have "the broadest and most complete set of machine-learning capabilities" among cloud computing service providers. AWS also unveiled a new machine learning training chip, Trainium.

Microsoft's Azure and Google's cloud computing unit also sell AI analytical services to business customers.

AI technology uses computer algorithms. The software programs aim to mimic the human ability to learn, interpret patterns and make predictions.

"Machine learning" is the most widely used form of AI deployed in industries. Machine learning systems use huge troves of data to train algorithms to recognize patterns and make predictions.

Software Companies Integrate AI Tools

"AI workloads are classified as training or inference," said Oppenheimer analyst Rick Schafer in a recent report. "Training is the creation of an AI model through repetitive data processing/learning. Training is compute-intensive, requiring the most advanced AI hardware/software. Generally located in hyperscale data centers, we estimate training total addressable market at $21 billion by 2025."

Other AI companies to watch include information technology services firms such as IBM (IBM), Accenture (ACN), and Epam Systems (EPAM). Palantir and IBM recently partnered to sell AI services.

Research firm IDC estimates that IBM, Accenture and Infosys hold 28% of the $17 billion artificial intelligence IT services market, said a Susquehana Financial Group report.

In addition, software companies are among artificial intelligence stocks to watch. Many software-as-a-service companies use AI tools.

San Mateo, Calif.-based Coupa (COUP) acquired Llamasoft, a provider of AI-powered supply chain software, for about $1.5 billion. Llamasoft's customers include Boeing (BA) and Home Depot (HD).

Enterprise software maker ServiceNow has been making AI acquisitions. Under new Chief Executive Bill McDermott, ServiceNow in early 2020 acquired two AI companies, Passage AI and Loom Systems.

DocuSign (DOCU) in 2020 agreed to buy Seal Software for $188 million. The startup uses artificial intelligence for contract analytics.

AI Stocks In Consumer Applications

Apple recently hired former Google scientist Samy Bengio, who left the internet search giant amid turmoil in its artificial intelligence research department. Bengio will lead a new AI research unit at Apple under John Giannandrea. He joined Apple in 2018 after spending about eight years at Google.

It's no secret that Alphabet, Microsoft, Facebook and Amazon are all spending big bucks on AI technology. The tech giants are putting AI in consumer products and services, such as voice-activated smart home devices. Google and Facebook use AI tools in digital advertising.

Amazon uses AI to customize online retail offerings and recommend products to website visitors. Facebook uses AI to enhance its activity feed, photo and social media apps.

Meanwhile, Netflix (NFLX) utilizes AI to personalize its internet TV content for subscribers.

Omdia forecasts that annual AI software revenue will increase from $9.7 billion worldwide in 2018 to $119.3 billion in 2025.

Artificial Intelligence Stocks Span Industries

In addition, AI competition is fierce in many industries. They include financial services, pharmaceuticals, health care and cybersecurity. Worldwide spending on AI software for retail uses will boom to $9.8 billion in 2025, up from $1.3 billion in 2019, forecasts Omdia.

The "AI" stock ticker has been claimed by C3.ai. The Redwood City, Calif.-based company sells AI software for the enterprise market. The initial public offering of C3.ai on Dec. 9 raised $651 million.

In the energy industry, startup C3.ai has teamed with Baker Hughes (BKR) and Microsoft to use artificial intelligence in preventive maintenance. Thomas Siebel, who started Siebel Systems and sold it to Oracle (ORCL) for nearly $6 billion in 2006, founded C3.ai.

In October, Microsoft and Adobe Systems (ADBE) partnered with artificial intelligence startup C3.ai to sell customer relationship management software, Salesforce.com's (CRM) core business.

Meanwhile, AI startup Databricks raised $1 billion in a new funding round, giving it a $28 billion valuation. Databrick's new investors include Alphabet, Salesforce.com (CRM) and Amazon.

There's plenty AI competition in enterprise software.

Meanwhile, Salesforce's Einstein tools improve sales forecasts. The AI software uses a company's historical lead and account data to predict which deals are more likely to close. Salesforce has expanded Einstein tools into financial services and other markets.

In addition, Salesforce on Nov. 24 said its Einstein platform now delivers more than 80 billion AI-powered predictions daily for sales, service, marketing and commerce. That's up from 6.5 billion in October 2019.

IBD 50: Leading Growth Stocks Use In AI

In e-commerce, Adobe's AI tools personalize website content to spotlight products or services that online shoppers are most likely to buy. Also, Adobe also belongs to the IBD Leaderboard.

Further, The IBD 50 roster of growth stocks has featured artificial intelligence stocks in online dating, digital advertising and business communications.

In addition, other companies using AI include:

Square (SQ): Square Capital, part of digital payment processor, provides loans to merchants. Square Capital uses an AI-driven credit assessment platform in granting new loans.

Match Group (MTCH): Controlled by IAC (IAC), Match is using artificial intelligence to improve its Tinder mobile dating app. Tinder's new "Super Likable" feature uses machine learning.

Trade Desk (TTD): The digital advertising firm provides automated tools to help customers buy online ads and optimize return on spending. Trade Desk's AI tools identify the best websites to buy ads on.

Cybersecurity Firms Among Artificial Intelligence Stocks
Here are other stocks to consider:

• Five9 (FIVN): A provider of cloud-based contact center software, Five9 is developing machine learning algorithms that help companies automate customer support. Five9 is partnering with Google on AI contact center software.

• Visa (V) and Mastercard (MA): The credit card networks use AI tools to detect financial crimes such as fraud and money laundering. In addition, big banks use AI in chat bots that provide online customer services.

• Palo Alto Networks (PANW) and Fortinet (FTNT): With artificial intelligence, the cybersecurity firms aim to spot and block malicious activity on computer networks better than existing technologies can.

Omdia forecasts that AI chipsets and accelerators for "edge" applications will grow to $51.9 billion by 2025, up from $7.7 billion in 2019. Those apps include mobile phones, automotive, drones, security cameras, robots and smart speakers.

In addition, memory chip makers such as Micron Technology (MU) should get a boost, analysts say. That's because intelligent devices will need more more memory to process AI apps.

U.S., China Battle In Artificial Intelligence

Semiconductor manufacturing equipment makers such as Applied Materials expect AI to boost demand for high-end gear. Test equipment makers such as Teradyne (TER) could get a boost from AI chips as well.

Also, the U.S. is racing versus China and other countries to develop artificial intelligence technology. In January, the U.S. government placed restrictions on the export of AI software.

Further, the use of artificial intelligence in facial recognition and some other areas has become controversial. Also, Alphabet CEO Sundar Pichai has called for regulation of artificial intelligence.

In addition, investors interested in AI technology also could consider the TCW Artificial Intelligence Equity Fund (TGFTX). It's primarily for institutions but is open to retail investors.

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>>> Is C3.ai Stock a Buy?


The AI stock has given up nearly all of its post-IPO gains.


Motley Fool

by Leo Sun

Sep 4, 2021


https://www.fool.com/investing/2021/09/04/is-c3ai-stock-a-buy/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Key Points

C3’s stock plunged after the company released its first-quarter earnings report.

Its revenue growth is accelerating again, but bottom-line losses are widening.

C3’s stock still looks expensive, and there are much better alternatives for both growth and value-oriented investors.


C3.ai's (NYSE:AI) stock tumbled 10% on Sept. 2 after the artificial intelligence software provider posted its first-quarter earnings. Its revenue rose 29% year-over-year to $52.4 million, beating estimates by $1.1 million. It posted a net loss of $37.5 million -- compared to a slim profit of $150,000 a year ago -- but its loss of $0.37 per share still matched Wall Street's expectations.

Should investors buy C3 after its post-earnings plunge? Or is it still overvalued even after plummeting more than 70% from its 52-week high?

What does C3.ai do?

C3 initially gained a lot of attention because its founder and CEO is Thomas Siebel. The seasoned executive previously co-founded Siebel Systems, an enterprise software company that sold to Oracle for $5.85 billion in 2005.

C3 provides AI algorithms that help companies schedule maintenance routines, detect fraud, optimize their inventories, and strengthen their existing CRM (customer relationship management) systems. Its tools can be customized and integrated into a company's existing software platforms, or provided as pre-built cloud-based applications.

Simply put, C3's flexible tools can help large companies streamline their businesses, cut costs, and make better data-driven decisions. It focuses on securing large "lighthouse" customers -- such as 3M, Royal Dutch Shell, and Microsoft -- whose stamp of approval then helps C3 attract many smaller companies.

When a hot IPO goes cold

C3 went public at $42 per share last December, opened at $100 on the first day, and skyrocketed to the low $180s later that month. But then the stock tumbled all the way back to the high $40s.

C3's revenue rose 88% in 2018, 48% in 2019, and 71% in fiscal 2020. Those impressive growth rates drew a stampede of bulls to its IPO. However, C3's revenue rose just 17% in fiscal 2021. It blamed that abrupt slowdown on the pandemic, which disrupted the energy and industrial markets, which accounted for most of its revenue.

C3 increased its customer count by 82% to 89 in 2021, but its average contract value fell from $12.1 million to $7.2 million. It grew its customer count by 85% year-over-year to 98 in the first quarter, and its average contract value dropped to $4.5 million.

During last quarter's conference call, Siebel claimed C3's declining contract values would stabilize the "lumpiness" in its business model by reducing its dependence on large customers. That statement was unusual since most cloud software companies prefer to gain larger customers with higher contract values. However, C3's adjusted RPO (remaining performance obligations) still rose 28% year-over-year in the second quarter, indicating that its current contracts will generate stable near-term growth.

C3 expects its revenue to rise 33%-35% for the full year. It expects its growth to accelerate as the pandemic-related headwinds wane and it upgrades its AI suite, launches new enterprise applications, and reaches more customers via its new partnership with Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google Cloud -- in which Google will co-sell C3's AI applications alongside its other cloud services.

High valuations and widening losses

C3's revenue growth looks decent, but the stock still trades at 20 times this year's sales -- even though it's hovering just slightly above its IPO price.

That price-to-sales ratio might initially seem reasonable compared to those of similar companies like Palantir (NYSE:PLTR), its AI and data mining peer, which trades at 34 times this year's sales. However, Palantir's revenue rose 47% last year thanks to the resilience of its government customers during the pandemic, and it anticipates at least 30% annual revenue growth from 2021 through 2025.

Salesforce (NYSE:CRM), which also helps companies optimize their operations with AI-powered cloud services, trades at ten times this year's sales. It expects its revenue to rise 23%-24% this year, and more than double to over $50 billion by fiscal 2026. Salesforce is also firmly profitable, while C3 and Palantir are not. Some of Salesforce's customers notably use C3's tools to enhance its core CRM platform.

C3 expects its operating loss to widen from $60.3 million in fiscal 2021 to $107-$119 million in fiscal 2022 as it ramps up its investments. During the conference call, CFO Dave Barter said the company would continue to "invest thoughtfully in headcount in programs to accelerate our revenue growth."

Is C3's stock worth buying?

C3 will likely keep growing as more companies seek out new ways to optimize their businesses with AI services. However, its stock is still expensive, its losses are widening, and there are plenty of more appealing AI-related alternatives with stronger sales growth or lower valuations.

I didn't like C3 when it was hovering near its all-time highs last December, and I still don't like it now. Investors should avoid it until it stabilizes its contract values, narrows its losses, and demonstrates that its partnerships with companies like Google will actually bring in new customers.


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>>> AI, Blockchain and Robotics ETFs Dominate


Investopedia

By NATHAN REIFF

Mar 17, 2021


https://www.investopedia.com/investing/ai-blockchain-and-robotics-etfs-dominate/?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral


Some of the most popular new investment themes focus on cutting-edge technologies such as artificial intelligence (AI), blockchain, and robotics. Below, we look at the exchange-traded funds (ETFs) that target these themes.

KEY TAKEAWAYS

Investors who want to narrowly focus on promising sectors such as AI, blockchain, or robotics—but don't want to pick individual stocks—might consider an ETF that targets these technologies.

One caveat, however, is that AI, blockchain, and robotics ETFs are likely to charge higher fees compared with ETFs that invest more broadly.

Because these technologies constantly evolve, investors need to regularly review what's inside the ETFs they're holding.

Thematic ETFs Present Long-Term Opportunities

According to Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA Research, investors are turning to cutting-edge technologies such as AI, blockchain, and robotics for the promise of higher returns over the long run. But he added the most popular choices all "tend to charge a premium price relative to market-cap-weighted ETFs."


This includes:


Global X Robotics & Artificial Intelligence ETF (BOTZ)1?

ROBO Global Robotics & Automation Index ETF (ROBO)2?

Siren NASDAQ NexGen Economy ETF (BLCN)3?

Capital Link NextGen Protocol ETF (KOIN)4?


Nonetheless, Rosenbluth says, "as more asset managers compete for investor interest, fees have and will continue to move lower."

Why might these ETFs be drawing so much interest from investors, despite their narrow focus and more expensive fees compared with traditional ETFs? For starters, it's important not to discount the effect of novelty. ETFs that focus on AI, blockchain, and robotics are relatively new.

Many investors are simply optimistic about these new industries and want to explore for themselves. Blockchain has been hailed as a breakthrough technology as important as the internet itself. Robotics offer the potential for greater efficiencies that come with increased automation, while artificial intelligence occupies a similar space.

While none of these technologies have yet to truly transform the business world (or the world at large), many believe they have strong potential to do so.

Long-Term Investors Should Not Be Complacent

It is crucial for long-term investors in ETFs, whether traditional or thematic, to remain involved in the investment process. "Investors should regularly review what's inside the ETFs they're holding to understand how the securities fit going forward," Rosenbluth says. "Investors should also periodically rebalance their assets as positions do not move up or down in tandem."

In other words, just because an ETF may be passively managed, that does not necessarily mean an investor can treat their individual investment passively.

This kind of advice applies to index ETFs just as much as it does ETFs representing new areas such as AI, blockchain, and robotics. Indeed, because these spaces constantly evolve, one might argue that investors in cutting-edge technologies need to remain even more vigilant. There remains great opportunities for investment success, but it requires constant care and maintenance.

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>>> Brooks Automation, Inc. (BRKS) provides manufacturing automation solutions for the semiconductor industry, and life science sample-based services and solutions for the life sciences market worldwide. The company operates in three segments: Brooks Semiconductor Solutions Group, Brooks Life Sciences Services, and Brooks Life Sciences Products. The Brooks Semiconductor Solutions Group segment offers wafer automation and contamination controls solutions and services. Its products include atmospheric and vacuum robots, robotic modules, and tool automation systems that offer precision handling and clean wafer environments; and automated cleaning and inspection systems for wafer carriers, reticle pod cleaners, and stockers. It also offers repair and refurbishment, diagnostics, and installation services, as well as spare parts and productivity enhancement upgrade services. The Brooks Life Sciences Services segment provides gene sequencing and gene synthesis services, including next generation sequencing, sanger sequencing, gene synthesis, bioinformatics, and good laboratory practices regulatory services; on-site and off-site sample storage, cold chain logistics, sample transport and collection relocation, bio-processing solutions, disaster recovery, and business continuity, as well as project management and consulting services; and sample intelligence software solutions and integration of customer technology. The Brooks Life Sciences Products segment offers automated cold storage systems; consumables, such as various formats of racks, tubes, caps, plates, and foils used for the storage and handling of samples in cold storage environments; and instruments used for labeling, bar coding, capping, de-capping, auditing, sealing, peeling, and piercing tubes and plates. The company serves semiconductor capital equipment and life sciences sample management markets in approximately 50 countries. Brooks Automation, Inc. was founded in 1978 and is headquartered in Chelmsford, Massachusetts.

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DAVOS 2020 - How to Survive the 21st Century - Yuval Noah Harari -

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>>> Shell, C3 AI, Baker Hughes, and Microsoft Launch the Open AI Energy Initiative, an Ecosystem of AI Solutions to Help Transform the Energy Industry


Yahoo Finance

Feb 1, 2021


https://finance.yahoo.com/news/shell-c3-ai-baker-hughes-220000073.html


Initial Offerings Include AI-Based Reliability Applications to I
mprove Operational Efficiency for the Energy and Process Industries

Shell (NYSE:RDS), C3 AI (NYSE:AI), Baker Hughes (NYSE:BKR), and Microsoft (NASDAQ:MSFT) today announced the launch of the Open AI Energy Initiative™ (OAI), a first-of-its-kind open ecosystem of artificial intelligence (AI)-based solutions for the energy and process industries. The OAI provides a framework for energy operators, service providers, equipment providers, and independent software vendors for energy services to offer interoperable solutions, including AI and physics-based models, monitoring, diagnostics, prescriptive actions, and services, powered by the BHC3™ AI Suite and Microsoft Azure.

"This initiative is about combining the efforts of global leaders to accelerate the digital transformation of the energy industry to new, safe, and secure energy and to ensure climate security," said C3 AI CEO Thomas M. Siebel.

The first set of OAI solutions provided by Shell and Baker Hughes are focused on reliability and designed to improve uptime and performance of energy assets and processes. These reliability solutions will serve as extensions to the current BHC3 Reliability application, an AI-based application that provides reliability, process, and maintenance engineers with AI-enabled insights to predict process and equipment performance risks for the energy industry. The application leverages the BHC3 AI Suite’s ability to integrate enterprise-scale data from disparate data sources and train AI reliability models that cover full plant operations while taking full advantage of Azure, Microsoft’s scalable, enterprise-class cloud infrastructure.

The OAI augments BHC3 Applications with partner-led, domain-specific solutions that accelerate deployment of AI-based reliability solutions to unlock significant economic value across the energy industry while helping to make energy production cleaner, safer, and more efficient. The initial OAI reliability solutions offered by Shell and Baker Hughes enable interoperability between BHC3 Reliability, OAI modules, and existing industry solutions for such applications. Solutions available today include proven and tested equipment- and process-specific modules with pre-trained AI models, codified subject matter expertise, low-latency data connectors, thermodynamic and operating parameter libraries, global health monitoring services, deep diagnostics, failure prevention recommendations, and prescriptive actions.

Shell is making modules available through the OAI, including:

Shell Predictive Maintenance for Control Valves

Shell Predictive Maintenance for Rotating Equipment

Shell Predictive Maintenance for Subsea Electrical Submersible Pumps

Baker Hughes will offer OAI interoperability with a range of existing technologies in the energy industry, including:

iCenter – Turbomachinery Advanced Digital Services

Bently Nevada System 1 Condition Monitoring Software

Baker Hughes Valve Lifecycle Management

The Open AI Energy Initiative will augment Baker Hughes and C3 AI Applications, including:

BHC3 Reliability

BHC3 Production Optimization

BHC3 Inventory Optimization

C3 AI CRM

"Digital technologies and AI are helping us improve our core business today and build the energy businesses of the future. Over the last few years, we have been working with C3 AI to scale our AI-based predictive maintenance solutions to reduce costs and improve the productivity, reliability, and performance of our assets," said Shell Chief Technology Officer Yuri Sebregts. "We are monitoring more than 5,200 pieces of equipment using machine learning across upstream and downstream manufacturing as well as integrated gas assets. We are excited to take this capability to market and want to develop an open ecosystem where others can offer AI solutions to help improve reliability across the industry."

"Taking energy forward requires new approaches to technology that leverage collaboration, open data standards, and cutting-edge AI capabilities," said Uwem Ukpong, executive vice president of regions, alliances & enterprise sales at Baker Hughes. "Working alongside our alliance partners at C3 AI and together with industry leaders at Shell and Microsoft, the OAI will help address the persistent industry challenge of nonproductive downtime. This new ecosystem will leverage our strong existing BHC3 portfolio and is a promising step in the digital transformation of energy."

"Microsoft is committed to the transformation of the energy sector and supporting solutions like the Open AI Energy Initiative, which are contributing to the realization of these transformation goals," said Microsoft Vice President of Energy Darryl Willis. "Digital technology is helping key industry areas such as plant reliability and maintenance, and Microsoft’s participation in the Open AI Energy Initiative will further advance the transition to a net-zero emissions future."

"The Open AI Energy Initiative is an early but clear reflection of the direction the market is heading," said Kevin Prouty, IDC group vice president, energy and manufacturing insights. "With this already-established alliance of leading organizations, including C3 AI, Shell, Baker Hughes, and Microsoft, the OAI is poised to single-handedly establish the ecosystem of enterprise AI for the energy industry."

Learn more about the Open AI Energy Initiative and its reliability solutions at https://bakerhughesc3.ai/products/bhc3-oai/

About C3.ai, Inc.

C3.ai, Inc. (NYSE:AI) is a leading provider of enterprise AI software for accelerating digital transformation. C3 AI delivers a family of fully integrated products: C3 AI® Suite, an end-to-end platform for developing, deploying, and operating large-scale AI applications; C3 AI Applications, a portfolio of industry-specific SaaS AI applications; C3 AI CRM, a suite of industry-specific CRM applications designed for AI and machine learning; and C3 AI Ex Machina, a no-code AI solution to apply data science to everyday business problems. The core of the C3 AI offering is an open, model-driven AI architecture that dramatically simplifies data science and application development. Learn more at: www.c3.ai

About Royal Dutch Shell plc

Royal Dutch Shell plc is incorporated in England and Wales‚ has its headquarters in The Hague and is listed on the London‚ Amsterdam‚ and New York stock exchanges. Shell companies have operations in more than 70 countries and territories with businesses including oil and gas exploration and production; production and marketing of liquefied natural gas and gas to liquids; manufacturing‚ marketing and shipping of oil products and chemicals and renewable energy projects. For further information‚ visit www.shell.com.

About Baker Hughes

Baker Hughes (NYSE: BKR) is an energy technology company that provides solutions to energy and industrial customers worldwide. Built on a century of experience and with operations in over 120 countries, our innovative technologies and services are taking energy forward – making it safer, cleaner and more efficient for people and the planet. Visit us at bakerhughes.com.

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>>> Is C3.ai Stock a Buy After Almost Quadrupling Since Its IPO?

What looks like a future leader in the AI industry comes at a steep premium.


Motley Fool

by Nicholas Rossolillo

Dec 24, 2020


https://www.fool.com/investing/2020/12/24/is-c3ai-stock-a-buy-after-quadrupling-since-ipo/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


If post-IPO share price action is any indication, investors think C3.ai (NYSE:AI) is an incredibly promising company. After pricing at $42 per share, the stock has quickly skyrocketed above $100 and beyond in just two weeks on the market. C3.ai raised over $700 million in cash from the offering, and as of this writing, the company has a market capitalization of over $15 billion.

C3.ai generated $157 million in revenue during its 2020 fiscal year. The stock thus fetches an incredibly steep premium of nearly 100 times sales as of this writing, and I'd pause before jumping in headfirst.

What is C3.ai?

C3.ai describes itself as "the world's largest enterprise AI production footprint," but the term "artificial intelligence" gets casually tossed around a lot these days. What is it exactly?

Founder and CEO Thomas Siebel, an early executive at Oracle in the 1980s when global spending on IT was still small potatoes, explained C3.ai was established based on future software technology needs. Siebel has been vocal for years that massive shifts have been taking place since the start of the 21st century. Specifically, "elastic cloud computing, big data, the internet of things, and AI or predictive analytics" are necessitating massive transformational overhauls at large companies.

C3.ai cites in its prospectus that the global IT market is worth some $2.3 trillion now, and the company's purpose is to help organizations navigate the large and increasingly complex changes needed to keep pace with modern infrastructure needs. That's where AI comes in (basically, computer-generated analytics and automation). C3.ai's software platform integrates with a company's IT infrastructure, or it can be used to purpose-build applications, make predictions, and manage operations. Use cases are wide ranging, from customer relationship management to inventory optimization to energy infrastructure monitoring. The company went to market targeting some of the largest organizations around (the U.S. Department of Defense, Royal Dutch Shell, and 3M to name a few) to vet its offering.

A tech investment that checks plenty of boxes

Let's forget the ludicrous valuation C3.ai carries at the moment. Excluding that, this software platform checks plenty of boxes for those looking for disruptive high-growth investments. With $157 million in revenue last year, this is a small business that claims its addressable market is worth $174 billion in annual spending right now, with that figure expected to expand to $271 billion by 2024. Revenue growth clocked in at 71% year over year in fiscal 2020 (the 12 months ended April 30, 2020), though that pace slowed to just 11% year over year during the six months ended Oct. 31, 2020 (due to effects from the pandemic).

In the first half of fiscal 2021, gross profit margin on services rendered was a lucrative 75%. The company also generated an unadjusted net loss of $14.8 million -- although it's growth rather than profit that's the priority right now for the company. And in its pursuit of its large addressable market, C3.ai reported having $290 million in cash and equivalents at the end of October and no debt. That doesn't include the $700 million it just raised from the IPO.

And if a less tangible metric is what you're after, Siebel is a more than capable CEO with decades of experience in high tech. Siebel also sold his last start-up (Siebel Systems) to his former employer Oracle back in 2006.

Is the stock a buy?

Share price valuation and how "expensive" shares are make up an inexact science. Theoretically, the longer you plan on holding a stock and the higher the company's growth rate, the greater the premium an investor would be willing to pay to acquire a position. For me personally, based on where C3.ai is right now, the 98 times sales price tag is steep enough I say don't buy unless your plan is to hold the stock at least a decade or more.

Of course, I would argue the premium would be far too much if C3.ai's growth doesn't rally from the 11% year-over-year rate it reported in the fist half of fiscal 2021. It also isn't alone in offering AI-based software applications to enterprises, so expecting a quick return to expansion like what it disclosed last year might be a touch too optimistic. After all, 2020's most successful IPO, Snowflake, currently trades for (in my opinion) an insane 175 times expected current year sales. But it expects to grow at least 113% this fiscal year. Put simply, C3.ai is far from warranting its current price tag unless it reports a sharp rebound in sales during the second half of its fiscal 2021.

Thus, I'm staying on the sidelines, but I usually wait a quarter or two before pulling the trigger on a fresh IPO stock. Given C3.ai's fast rise out of the gate and yet-to-be-seen growth post-pandemic, I see no need to get hasty with a buy just yet.

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C3.ai - >>> Here's Why This Hot Artificial Intelligence IPO Stock Isn't Worth Buying

C3.ai is a promising AI company, but don't pay the wrong price for its high-flying stock.


Motley Fool

by Leo Sun

Dec 31, 2020


https://www.fool.com/investing/2020/12/31/heres-why-hot-ipo-stock-isnt-worth-buying-c3ai/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


C3.ai (NYSE:AI) was one of the hottest tech IPOs of 2020. The enterprise artificial intelligence company priced its IPO at $42 a share on Dec. 8, but the stock opened at $100 the following day and subsequently surged to about $140.

C3.ai raised $651 million in its IPO, and it now has a market cap of about $13.4 billion, or 85 times its fiscal 2020 revenue. That frothy valuation indicates investors are still thrilled about C3.ai's growth prospects -- but the bulls are ignoring some obvious weaknesses, and pricing too much growth into this high-flying stock.

What does C3.ai do?

C3.ai's founder and CEO is Thomas Siebel, who previously co-founded Siebel Systems, the enterprise software company Oracle (NYSE:ORCL) acquired for $5.85 billion in 2006.

Siebel founded C3.ai in 2009. The company initially offered its cloud-based AI tools to energy companies, but it now serves a wide range of organizations across the commercial, industrial, and government sectors.

C3.ai's top customers include the machinery maker Caterpillar, the oil and gas services giant Baker Hughes (NYSE:BKR), and the European energy company Engie (OTC:ENGIY). It notably generated 36% of its revenue from Baker Hughes and Engie in fiscal 2020, which ended in April.

These organizations all use C3.ai's software to streamline their operations, cut costs, and make data-driven decisions. Its software helps Caterpillar optimize its inventories, Baker Hughes streamline its maintenance routines, and Engie modernize its energy infrastructure.

C3.ai expands via a "lighthouse" strategy, in which it secures a top "lighthouse" customer in a sector to attract its industry peers. These lighthouse customers include 3M, Royal Dutch Shell, and the U.S. Air Force.

How fast is C3.ai growing?

C3.ai generated 86% of its revenue from subscriptions and the rest from professional services last year. Its revenue rose 88% in 2018, 48% in 2019, and another 71% to $157 million in fiscal 2020. But in the first quarter of 2021, its revenue only rose 16% year over year to $40.5 million as COVID-19 disruptions throttled its growth.

C3.ai says it generates "uncommonly high" contract values, thanks to the "high-value outcomes" its AI tools produce. As a result, its average contract was worth $12.1 million in fiscal 2020, which the company calls a "high-water mark for the applications software industry."

C3.ai tries to grow its revenue per customer with a "land and expand" strategy, wherein it locks in customers with a smaller contract, then signs them onto additional contracts. Its initial contract is worth about $13 million, but it believes it can boost that figure to $39 million via additional contracts. Its average contract lasts for about three years.

But like many other cloud service companies, C3.ai is unprofitable. Its net losses widened over the past three years, and it ended 2020 with a net loss of $69.4 million -- compared to a loss of $33.3 million in 2019. It generated a slim profit of $150,000 in the first quarter of 2021, due to lower operating costs during the pandemic, but it probably won't stay in the black for the rest of the year.

C3.ai's customer concentration is a major risk, and it could still face competition from public cloud leaders like Amazon (NASDAQ:AMZN) Web Services (AWS) and Microsoft (NASDAQ:MSFT) Azure, even though it classifies these tech giants as technological partners.

C3.ai's AI services run on top of AWS, Azure, and other cloud platforms -- but AWS and Azure also offer their own integrated AI services. C3.ai claims its services are cheaper, more efficient, and more customizable than those integrated AI solutions, but Amazon and Microsoft could still develop new AI services to compete against C3.ai in the future.

Don't pay the wrong price for the right company

C3.ai has a promising business model, and it could have plenty of room to grow. It estimates the total addressable market for AI tools will grow from $174 billion in 2020 to $271 billion in 2024 -- and its "land and expand" strategy could boost the average values of its contracts as that market grows.

Unfortunately, C3.ai's stock is simply too hot to handle at 85 times last year's sales. Even if it doubles its revenue this year, it would still be pricier than other bubbly tech stocks like Palantir and JFrog -- which both trade at roughly 30 times next year's sales.

I'd consider buying C3.ai's stock if a market crash cuts its price in half, but there's far too much optimism baked in at these prices. The market's near-term momentum might carry it slightly higher, but I'm not interested in paying the wrong price for the right company.

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C3.ai - >>> Investors Should Watch This Newly Listed AI Company. Here's Why


C3.ai is a leader in bringing artificial intelligence to bear on enterprise-level problems, and the market for what it offers is only going to grow.


Motley Fool

Lawrence Nga

Jan 7, 2021


https://www.fool.com/investing/2021/01/07/investors-watch-newly-listed-ai-company-c3-ai/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


C3.ai (NYSE:AI) might just be the best artificial intelligence (AI) company most investors had never heard of. Until last month, at least.

On Dec. 8, C3.ai stock debuted on the New York Stock Exchange with a monster first-day pop, closing 120% above its $42 IPO price. As of Jan. 5, it was trading at around $119 a share -- almost three times its IPO price. For context, Airbnb and Palantir -- among last year's hottest market debutantes -- were up about 103% and 220%, respectively, from their IPO prices.

Energy company Baker Hughes (NYSE:BKR) and tech giant Microsoft (NASDAQ:MSFT) are both backing C3.ai, betting its AI technologies will transform enterprise software in much the same way that previous AI innovations have given consumers such things as Alphabet's Google's highly effective search engine, Netflix's algorithms, and digital assistants like Apple's Siri.

And that's just one of the many reasons why investors should keep an eye on the company.

What C3.ai does

Operating on a software-as-a-service (SAAS) model, C3.ai provides the building blocks for companies to create AI applications. It provides two main software solutions. The C3 AI Suite is an app development and runtime environment (hardware and software) that its customers can use to build and run their own AI applications. The company also offers C3 AI Applications -- ready-made applications that clients can install and use immediately.

What's so special is that C3.ai's tools enable companies to build AI applications fast and with less code -- significantly reducing development time. In some cases, they cut the amount of code that needs to be written by 99%. With C3.ai's solutions, some of the biggest companies in the world -- like Royal Dutch Shell and AstraZeneca -- are building and running AI applications in as little as four weeks.

Among C3.ai's clients is the U.S. Air Force, which uses its systems to help predict whether important weapons systems will be ready for deployment. According to a Department of Defense report, C3.ai's technology managed to identify a set of fewer than 100 aircraft parts -- out of more than 1,000 -- that were responsible for 90% of total aircraft downtime.

Another customer is Engie, one of Europe's biggest utility companies. According to a Forbes article, Engie used C3.ai software to analyze more than a billion data points to learn why one power source lagged another by 2%. Solving that problem saved the utility more than $125 million a year. Engie is now one of C3.ai's three biggest customers.

Why C3.ai deserves investors' attention

C3.ai operates in the massive, growing market for enterprise AI infrastructure and applications.

It estimates its total addressable market will grow from $174 billion in 2020 to $271 billion in 2024. And as new use cases for AI emerge every day, by the time we get to 2024, that number could be even bigger. With $157 million in revenue in the fiscal year that ended in April 2020, the company has barely scratched the surface of its growth potential.

But why favor (or invest in) C3.ai when so many other companies are eyeing the same market opportunities?

To start with, C3.ai was an early mover in this industry. It's invested hundreds of millions of dollars over the course of a decade, developing advanced technology that has proven itself at the highest level. These massive capital investments -- coupled with the valuable expertise C3.ai has gained so far -- give it a huge leg up on newer entrants.

According to CEO Thomas Seibel, many of C3.ai's clients have tried to replicate what it has built by combining components from other players such as Snowflake, Databricks, Datastax, H2O.ai, and DataRobot -- but came up short. Seibel claims General Electric spent about $6 billion on such a project before giving up.

Seibel also asserts that his company has taken the functionality of every software company involved in AI -- including Palantir and Snowflake -- and built their features into "one cohesive architecture."

While that's a bold statement, Seibel's got the pedigree to back it up. As employee No. 20 at Oracle, he has been at the forefront of enterprise software for decades. After leaving Oracle in 1990, he founded Seibel Systems, a pioneering customer relationship management (CRM) firm, which Oracle acquired in 2006. He left Oracle again three years later to kick-start C3.ai, bringing along key Seibel Systems executives. His extensive experience, coupled with his strong reputation and network, will help his current company attract talent and clients.

An early mover in a huge and growing market, run by battle-hardened industry executives? That's an exciting combination. And as long as the company stays the course, it will likely keep winning new customers and extending its early lead.

Should investors buy the stock now?

By now, it's not hard to see C3.ai is well-positioned to ride the boom in enterprise AI. Its revenue more than quadrupled from $33 million in its fiscal 2017 to $157 million in fiscal 2020, and there are good reasons to expect this momentum to continue.

It's no wonder, then, that investors are excited about the company -- C3.ai trades at a nose-bleed valuation of $11.5 billion, around 60 times sales. All things considered, I would suggest putting C3.ai stock on your watch list and waiting for a more reasonable entry price.

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>>> C3.ai Now Rivals Snowflake for Title of Priciest Tech Stock


Barron's

By Eric J. Savitz

Dec. 22, 2020


https://www.barrons.com/articles/c3-ai-now-rivals-snowflake-for-title-of-priciest-tech-stock-51608657786?siteid=yhoof2


If ever there was a company in desperate need of “growing into its valuation,” it’s C3.ai.

While the world has been focused on the remarkable recent public market debuts for DoorDash and Airbnb, the real fireworks in the tech IPO market has been around the astonishing reception for C3.ai, a provider of artificial intelligence software.

C3.ai (ticker: AI) has generated some serious buzz, thanks in no small measure to founder and CEO Tom Siebel. An early Oracle (ORCL) exec, Siebel built the pioneering customer-relationship-management software category with Siebel Systems, which Oracle acquired for $5.85 billion in June 2006. Adding to C3.ai’s appeal were a pair of high-profile private placements at the IPO price— Microsoft (MSFT) invested $50 million, and an arm of Koch Industries took a $100 million stake.

C3.ai went public on Dec. 8 at $42 a share; the stock opened at $100. Over the past five trading days, the stock has rallied almost 70%, driving the company’s market cap into the stratosphere. (What’s above the stratosphere?) C3.ai has a little over 97 million shares outstanding, if you assume the underwriters exercise the green shoe on the stock offering. There are another 42 million deep-in-the-money employee stock options with an average strike price of $5.57 a share. Throw those into the mix, and there are about 139 million fully diluted shares outstanding.

At $170 a share, the stock is worth a remarkable $23 billion.

Keep in mind that C3.ai had revenue for the six months ended Oct. 31 of $81.8 million, up 10.9% from the comparable period a year earlier. In the April 2020 fiscal year, the company posted 71% growth to $156.7 million. So what’s the right assumption on growth? When I talked to Siebel a few weeks ago, here’s what he said:

“In the February, March, April, May time period, we hit a speed bump the size of the Empire State Building. It was not a business cycle issue. This [the pandemic] was an act of God. It was apocalyptic. Business came to a screeching halt. Our revenue continued to grow, because we have a backlog, but it grew at a slower rate. But once you got to July, August, September, with what’s happening in digital transformation and AI, it’s blowing and going. Our pipeline is growing at a greater rate than it ever has grown. Coming out of this, you will see a company growing not at 70% or 80%, ain’t no way no how, but we’ll be growing in the top decile of software companies.”

Let’s say the company’s growth rate in the second half of the fiscal year rebounds to 30%; that would suggest April 2021 fiscal-year revenue in the $200 million range. And that suggests the company is trading somewhere north of 100 times current-year sales. That’s comparable to the valuation on Snowflake (SNOW), which is trading at about 100 times the Street’s estimated sales for the January 2022 fiscal year but growing a lot faster, around 100% at the top line.

No question that C3.ai is addressing a large market, but it also has just a few dozen customers—all large enterprises—and a recent history of lumpy revenue growth. If ever there was a company in desperate need of “growing into its valuation,” this would be it.

The company couldn’t immediately be reached for comment on the stock activity on Tuesday.

C3.ai was up 5.4%, at $169.72, in recent trading, and has traded as high as $179. The S&P 500 was down 0.2%.

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C3.ai - >>> This month’s hottest IPO isn’t DoorDash or Airbnb — it’s artificial-intelligence company C3.ai


MarketWatch

Dec. 16, 2020

By Daniel Newman


https://www.marketwatch.com/story/this-months-hottest-ipo-isnt-doordash-or-airbnb-its-artificial-intelligence-company-c3-ai-11608055938?siteid=yhoof2


Tom Siebel’s company has an enormous market for democratizing artificial intelligence.

The companies certainly didn’t disappoint coming out the gate, especially if you were an early investor, as DoorDash and Airbnb soared 85% and 112%, respectively, on their opening day of trading. Pundits and analysts were left befuddled, and the prices of each have slipped in the meantime.

An initial public offering that was overlooked during that time was C3.ai AI, 14.96%. Shares of the Redwood City, Calif., company sit well over double the set price.

C3.ai is the more interesting company that debuted last week. Its work over the past decade to democratize artificial intelligence (AI) for enterprise has real promise, and there is evidence through its early partnerships and customer success that it could lead to significant and stable growth. The company is led by CEO Tom Siebel, who had the same position at Siebel Systems, which was purchased by Oracle ORCL, 2.09% in 2006. The 68-year-old billionaire founded the company in 2009.

B2B applications

Artificial Intelligence is a popular buzz word that has infiltrated many of our lives through everything from Siri on our Apple AAPL, -0.74% iPhones to powerful recommender engines that help us find products and services on Amazon AMZN, -1.17%. The consumer applications have created greater awareness to AI for many of us, but there is a bigger AI opportunity brewing in business-to-business (B2B) enterprise applications. AI to help banks better understand customer churn, identify fraud and deploy predictive revenue models. To help oil and gas companies predict maintenance requirements to proactively identify failures before they happen. And to help health-care providers improve health outcomes, reduce care costs and improve patient experience.

C3.ai’s offerings are designed to democratize at scale all of those scenarios and others in aerospace and defense, telecommunications, retail, utilities and more. The C3.ai AI Suite, which is the company’s core technology, is designed to sharply reduce the time to value in using AI in the enterprise. It functions as a software as a service (SaaS) application, and while it has deep partnership integration with Microsoft MSFT and Adobe ADBE, it can be flexibly deployed on Amazon’s AWS, IBM IBM, 0.24% Cloud, Google GOOG, -1.18% Cloud and/or on-premise.

The outcome of its significant R&D investment is a powerful enterprise AI footprint that delivers more than 1.1 billion predictions a day using more than 4.8 million machine-learning models that the company has in production. Moreover, according to C3.ai, these predictions and models touch more than 50 million businesses on a daily basis.

Beyond technology partners, C3.ai has also been able to apply its model-driven architecture to win a diverse group of marquis customers across a vast set of industries, with an average deal size in 2020 at over $12.1 million. This includes Royal Dutch Shell RDS.A, -1.42%, Astra Zeneca AZN, -0.64%, Baker Hughes BKR, -0.28%, Raytheon Technologies RTX, 0.04% and the U.S. Air Force. Customer expansion yielded a healthy 71% year-over-year growth rate for C3.ai in its fiscal 2020 totaling $157 million, and an average growth rate over the past three fiscal years of 69%.

Perhaps what is more exciting is the market potential for C3.ai as the proliferation of AI continues to accelerate. According to the company’s S1 filling, it estimates its total addressable market (TAM) at $174 billion this year, growing to $271 billion by 2024. Specifically, the company sees itself participating in the $44 billion enterprise AI software market, the $63 billion enterprise infrastructure software market and the $93 billion enterprise application market.

Streamlining data

Those markets are converging rapidly with AI capabilities being a critical connector. Many companies will be seeking tools and technologies that can shorten the difficult process of managing vast data repositories, software tools and infrastructure complexities. C3.ai’s architecture is designed to streamline this process and considerably shorten the enterprise challenge of applying AI to solve complex business problems.

Of course, the road for C3.ai will have its share of challenges. Large enterprise software and infrastructure providers like SAP SAP, -0.85%, Salesforce CRM, 0.16% and Oracle ORCL, 2.09%, to name a few, are all working diligently to apply greater AI capabilities to exponential data to deliver next-generation insights for enterprise customers. This massive market opportunity isn’t a secret, by any means. However, with the flexible architecture of C3.ai, there is also an argument that many enterprise software platforms, much like Adobe and Microsoft already have, could see C3.ai as complementary and as a vehicle to speed customer adoption of industry-specific AI capabilities.

What perhaps was most evident to me, after watching last week’s IPO frenzy, is it didn’t take a sophisticated AI model to see the potential of C3.ai.

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>>> Best AI ETFs for Q1 2021

ARKQ, BOTZ, and IRBO are the best AI ETFs for Q1 2021


Investopedia

By MATTHEW JOHNSTON

Nov 17, 2020


https://www.investopedia.com/investing/top-etfs-capitalizing-artificial-intelligence/


Artificial intelligence (AI) exchange-traded funds (ETFs) seek to provide exposure to a fast-growing segment of the technology industry. AI aims to simulate human intelligence, leveraging powerful algorithms to make machines think and act like human beings. While the automation of repetitive tasks and substitution of human labor by machines is nothing new, AI is accelerating this trend, resulting in giant leaps in productivity.

KEY TAKEAWAYS

The AI sector outperformed the broader market over the past year.
The ETFs with the best 1-year trailing total return are ARKQ, BOTZ, and IRBO.

The top holdings of these ETFs are Tesla Inc., NVIDIA Corp., and class A shares of Pinterest Inc., respectively.

For investors optimistic about AI's growth potential, but unsure which companies will outperform, an AI ETF is an option. AI ETFs hold a basket of stocks of companies engaged in some aspect of AI, enabling investors to share in the growth of AI companies' profits without the challenge of trying to separate the winners from the losers.

A special note that some ETFs that use AI as a tool for picking stocks are also sometimes referred to as AI ETFs. But this story focuses on ETFs targeting companies that use AI for other industries, such as robotics, automation, health care, and automobiles.

There are 5 distinct AI ETFs that trade in the U.S., excluding leveraged funds and those with less than $50 million in assets under management (AUM). The AI sector does not have its own benchmark, but its performance is best reflected in the index for the technology sector, the Technology Select Sector SPDR ETF (XLK). The XLK has outperformed the broader market with a total return of 41.8% over the past 12 months, more than double the S&P 500's total return of 18.1%, as of November 13, 2020.1? The best-performing AI ETF, based on performance over the past year, is the ARK Autonomous Technology & Robotics ETF (ARKQ). We examine the 3 best AI ETFs below. All numbers below are as of November 16, 2020.


ARK Autonomous Technology & Robotics ETF (ARKQ)

Performance over 1-Year: 83.3%
Expense Ratio: 0.75%
Annual Dividend Yield: N/A
3-Month Average Daily Volume: 267,655
Assets Under Management: $861.2 million
Inception Date: September 30, 2014
Issuer: ARK Investment Management

ARKQ holds a basket of multi-cap equities focused on autonomous vehicles, robotics and automation, 3D printing, and space exploration.2? Until November of 2019, the fund was called the ARK Industrial Innovation ETF. ARKQ is an actively managed ETF that employs a growth strategy and is geographically diversified across developed markets throughout the world. The fund's top three holdings include Tesla Inc. (TSLA), an electric vehicle and clean energy company; sponsored ADRs of Materialise NV (MTLS), a Belgium-based provider of additive manufacturing software and 3D printing services; and class C shares of Alphabet Inc. (GOOG), a multinational technology conglomerate and parent of Google.3?


Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ)

Performance over 1-Year: 43.2%
Expense Ratio: 0.68%
Annual Dividend Yield: 0.32%
3-Month Average Daily Volume: 1,134,233
Assets Under Management: $2.0 billion
Inception Date: September 12, 2016
Issuer: Global X

BOTZ seeks to track the Indxx Global Robotics & Artificial Intelligence Thematic Index, comprised of companies operating in the global automation and robotics industries.4? The ETF is focused on companies poised to benefit from increased adoption and use of robotics and AI, including ones focused on industrial robotics and automation, non-industrial robots, and autonomous vehicles.5? The fund is composed of multi-cap equities and follows a blended strategy, investing in a mix of growth and value stocks across developed markets. The fund's top three holdings include NVIDIA Corp. (NVDA), a semiconductor company; FANUC Corp. (6954:TKS), a Japan-based manufacturer of factory automation systems, equipments, and robots; and Intuitive Surgical Inc. (ISRG), a maker of robotic products used in minimally invasive surgery.6?


iShares Robotics and Artificial Intelligence ETF (IRBO)

Performance over 1-Year: 40.8%
Expense Ratio: 0.47%
Annual Dividend Yield: 0.30%
3-Month Average Daily Volume: 55,545
Assets Under Management: $219.7 million
Inception Date: June 26, 2018
Issuer: iShares

IRBO seeks to track the NYSE FactSet Global Robotics and Artificial Intelligence Index, an index composed of companies engaged in robotics and AI across a broad range of developed and emerging market economies.7? The ETF invests in a range of multi-cap equities and follows a blended strategy of investing in both growth and value stocks. The fund's top three holdings include class A shares of Pinterest Inc. (PINS), a social media company providing a pinboard-style photo-sharing website; class A shares of Snap Inc. (SNAP), a social media company that develops mobile camera application products and services; and Nidec Corp. (6594:TKS), a Japan-based manufacturer of small precision motors mainly used in HDD and optical disk drives.8

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>>> C3.ai More Than Doubles After $651 Million IPO


by Crystal Tse and Katie Roof

Bloomberg

December 9, 2020


https://finance.yahoo.com/news/siebel-led-c3-ai-more-175443459.html


(Bloomberg) -- C3.ai Inc., the software maker founded by former Oracle Corp. executive Tom Siebel, rose 120% in its trading debut from the price in its $651 million initial public offering.

The shares closed Wednesday at $92.49 in New York, giving the company a market value of about $8.9 billion.

The Redwood City, California-based company sold 15.5 million shares Tuesday for $42 apiece after marketing them for $36 to $38.

In the next few years, the company plans to invest in market share, growth, partnerships and technology,” Siebel said in an interview. He said C3.ai is competing against companies that are trying to build large artificial intelligence platforms for themselves.

“Virtually every one of our customers would have tried to build these enterprise AI platforms once, twice or three times and failed in the effort,” Siebel said.

He said he doesn’t expect the business to be cash positive for a few years, but that it will be after that.

C3.ai has said that big name backers including one of its partners, Microsoft Corp., would acquire shares in a private placement as part of the listing.

Spring Creek Capital, an affiliate of Koch Industries, planned to buy $100 million in common stock while Microsoft would buy $50 million of them at the IPO price, according to an earlier filing.

Earlier this year, C3.ai formed a partnership with Microsoft and Adobe Inc. for a new customer-relationship management software seeking to combat Salesforce.com Inc.

C3.ai’s offering was led by Morgan Stanley, JPMorgan Chase & Co. and Bank of America Corp. The company’s shares are trading on the the New York Stock Exchange under the symbol AI.

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C3.ai - >>> Tom Siebel Is Back: An Interview With the CEO and Founder of C3.ai


Barron's

By Eric J. Savitz

Dec. 9, 2020


https://www.barrons.com/articles/c3-ai-ceo-tom-siebel-on-ai-software-industry-outlook-51607561566?siteid=yhoof2


C3.ai had a spectacular debut in the public market on Wednesday. The artificial-intelligence software company priced an offering of 15.5 million shares at $42 a share, above the expected range of $36 to $38 a share, before opening at $100. The stock closed its first day at $92.49, a 120% gain from its IPO price.

Among other things, the IPO marks the return to public view of Tom Siebel, the founder and CEO of C3.ai (ticker: AI). The legendary software entrepreneur was an early executive at Oracle (ORCL) and the founder of the customer relationship management software pioneer Siebel Systems, which he sold to Oracle for $5.86 billion in 2006.

Barron’s caught up with Siebel on listing day for an insightful chat about C3.ai, the outlook for artificial intelligence software, and assorted other topics. An edited transcript of our conversation can be found below:

Barron’s: Hey, Tom. Looks like C3.ai is off to a spectacular start as a public company.

Tom Siebel: I am not competent to comment on the behavior of equity markets. It’s not my field. To the extent I have any expertise, it’s in building and operating software companies. That said, the big picture is we have a huge addressable market, and the investment community recognizes there is a huge market in commercial and industrial AI applications. We’re looking at a $250 billion addressable software market—that’s bigger than a bread box.

And how are you going after it?

We spent the last decade building out a really remarkable software platform, called the C3.ai suite, that represents 1,000 man-years of software engineering work. It is a cohesive set of software services that allows our customers to rapidly and successfully design, develop, provision and operate enterprise and commercial AI applications, at small, medium and large scale.

You so far have a relatively smaller number of very large customers.

The Phase 1 strategy, yes, did involve customer concentration. We wanted to focus on “lighthouse” customers— Shell, Enel, ENGIE, Koch, the United States Air Force, Philips Medical—in multiple industries, multiple geographies and multiple use cases, and demonstrate that the product could be applied successfully to solve complex AI problems, that delivered substantial economic value in a short period of time. And we did that.

What comes next?

The next phase is about scaling the business, not only selling to global juggernauts but also to middle-sized companies, selling to divisions and departments of large companies; in banking, in telecom, in financial services, and in manufacturing and aerospace; in Asia, Europe, North America. That’s the phase we’re entering now. I would argue we have clear technology leadership in this space. I’m unaware of anyone who has built a successful AI platform like we have. If we succeed at that objective, establishing a market position in enterprise AI, this will be a large and hugely successful enterprise application software company. And we’ll build a company that is structurally profitable and cash flow positive.

How should people think about what you do? Are you more an application developer or a platform for clients to build their own applications, or are you building custom applications?

Unfortunately, the answer to that question is yes. About 86% of our revenue is software-as-a-service recurring revenue. Today, 65% of that is from applications. We have a family of applications for banking, like anti-money-laundering, cash management, credit approval, broker rule compliance. Or applications for utilities, like distributed energy resource management, AI-based predictive maintenance, smart grid analytics. We have a family of applications for oil and gas, and for aerospace. So today 65% of our software revenue comes from those applications, and 35% comes from the platform. We sell both. Shell has 200 projects they’re building on top of our platform. Enel has 150. I suspect in a steady state, license revenue will be around 60% for applications, and 40% platform.

And what about services?

Services is about 14% of overall business and will stay there. We’ll prevent it from getting larger by partnering with IBM Global Services and others. If we let it get larger, we’ll get valued as a services business, which as you know carry lower valuations.

Microsoft took a $50 million stake in C3.ai at the IPO price. What’s the story there?

That investment had nothing to do with them making money. We have a huge partnership with these guys. Our technology is entirely complementary to Azure. I’m working on hundreds of millions of dollars of sales opportunities with the Microsoft sales organization.

And you announced a deal with them recently in a very familiar area for you.

We announced a partnership with Microsoft and Adobe, to take the Microsoft CRM stack, the Adobe marketing automation stack, and the C3.ai stack, and bring to market an entirely family of applications—believe it or not—in AI-enabled CRM [customer relationship management] software.

CRM of course was what Siebel Systems did.

So what’s old again is new again. It’s not unusual when I’m working with these large customers—who often were huge Siebel Systems customers—that as we’re deploying our 12th AI application, they say, hey Tom, when are you going to do AI-enabled CRM. We’ve developed those solutions in combination with Microsoft and Adobe, and all three organizations will be selling those worldwide. So the symbolism of that Microsoft investment was not about making money—it was about sending signal to the market and to their own employee base that, hey, this is an important market, pay attention.

Who are your competitors?

When we were doing database software at Oracle in the ‘80s, the competition was companies building their own relational database systems. Who succeeded at that? No one. When we brought ERP systems and CRM systems to market in the 90s, the competition was, the customer was going to build their own. Who succeeded at building their own ERP system, name the company? Nobody did. They all would end up buying from Oracle, or SAP, or Siebel or somebody else. So it is not unusual—this is standard in the business—that when you get into a new market, the knee-jerk reaction of the CIO is to build it himself. Or to pay Accenture $500 million to help them build it.

So the competition is from homegrown systems.

Virtually every one of our customers has tried one, two, three times to build it themselves. What they’ll do is use componentry from Snowflake [SNOW], Databricks, Datastax, H2O.ai, and DataRobot, and they’ll attempt to assemble all of these things together into a cohesive whole that does something useful. Unfortunately, it is an impossible problem, and to my knowledge no one has ever succeeded at doing it. General Electric [GE] spent, like, $6 billion over a number of years trying to do this before they folded their tent.

Databricks, Datastax.... That’s a very hot set of companies you just named.

I’m not saying that these products from companies like Databricks or Snowflake have no value. They have very high value. You can think of what we’ve done—and I know this is hard to believe—is to take the functionality of every software company that’s involved in AI, aside from the cloud, take Palantir, Databricks, DataRobot, H2O, Snowflake, and built all of it into one cohesive architecture. What Palantir does as a company is a feature for us. What H2O and DataRobot do is something called auto ML [machine learning]. That’s a feature. What Alteryx does is a feature within our product, we call it Ex Machina.

So wait, don’t you compete with all of them?

If one of our customers wants to use one of these things—and every company does—because they’ve standardized on it, or somebody thinks it is technically superior to our solution, it doesn’t matter, they can use it. If Shell wants to use DataRobot instead of our auto ML capability, God bless them, it’s fine. If they want to use Databricks, they do—and by the way, they do use Databricks, instead of our data virtualization technology. They don’t have to lose for me to win. We really don’t compete with those guys.

A few years ago, you changed the company’s name, from C3.iot to C3.ai. Tell me about that.

There was a time period, in 2016 and 2017, when the internet of Things was all the rage, and all anyone wanted to talk about was connecting devices. And we do that. So that was probably a mistake to name the company that. Now, for instance we read data from 57 million sensors and 42 million smart meters. Really what we’re doing with the data is predictive analytics. We’re doing AI. I got to a point where 100% of our applications were predictive analytics and AI and 30% of that was IoT. So the first 20 minutes of every presentation was explaining that we were not really an IoT company. It wasn’t a change in the business, we were confusing the market with the name. It was a mistake. AI happens to be really what we do.

Tom, you guys were growing 70% in the April 2020 fiscal year, and dropped to 10% growth in the last six months. What’s the story there?

In the February, March, April, May time period, we hit a speed bump the size of the Empire State Building. It was not a business cycle issue. This [the pandemic] was an act of God. It was apocalyptic. Business came to a screeching halt. Our revenue continued to grow, because we have a backlog, but it grew at a slower rate. But once you got to July, August, September, with what’s happening in digital transformation and AI, it’s blowing and going. Our pipeline is growing at a greater rate than it ever has grown. Coming out of this, you will see a company growing not at 70% or 80%, ain’t no way no how, but we’ll be growing in the top decile of software companies.

Tom, this was fun, thanks very much.

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Interview with Thomas Siebel of C3.ai -

>>> C3.ai (AI), Inc. operates as an enterprise artificial intelligence (AI) software company. The company provides software-as-a-service applications for enterprises. Its software solutions include C3 AI Suite, a platform-as-a-service application development and runtime environment that enables customers to design, develop, and deploy enterprise AI applications; and C3 AI Applications, which include industry-specific and application-specific turnkey AI solutions. Its C3 AI applications include C3 AI Inventory Optimization, a solution to optimize raw material, in-process, and finished goods inventory levels; C3 AI Supply Network Risk, which provides visibility into risks of disruption throughout the supply chain operations for enterprise supply chain managers; C3 AI Customer Churn Management, which enables account executives and relationship managers to monitor customer satisfaction using transactional, behavioral, and contextual information, as well as to take action to prevent customer churn with AI-based and human-interpretable predictions and warning; C3 AI Production Schedule Optimization, a solution for scheduling production; C3 AI Predictive Maintenance, which provides insight into asset risk to maintenance planners and equipment operators; C3 AI Fraud Detection solution; and C3 AI Energy Management solution. The company also offers integrated turnkey enterprise AI applications for various market segments, including oil and gas, chemicals, utilities, manufacturing, retail, banking, financial services, intelligence, aerospace and defense, healthcare, telecommunications, pharmaceuticals, smart cities, transportation, and others. C3.ai, Inc. serves customers primarily in Europe, Asia, and the United States. It has strategic partnerships with Baker Hughes in the areas of oil and gas market; FIS in the areas of financial services market; Raytheon in the areas of the U.S. defense and intelligence communities; and Microsoft and Adobe in the areas of customer relationship management. The company was formerly known as C3 IoT, Inc. and changed its name to C3.ai, Inc. in June 2019. C3.ai, Inc. was founded in 2009 and is headquartered in Redwood City, California.

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>>> Siebel-Led C3.ai Exceeds IPO Target to Raise $651 Million


Bloomberg

Katie Roof and Crystal Tse

December 8, 2020


https://finance.yahoo.com/news/siebel-led-c3-ai-exceeds-005254137.html


(Bloomberg) -- C3.ai Inc., the software maker founded by former Oracle Corp. executive Tom Siebel, has priced its initial public offering above the marketed range to to raise $651 million, according to a people familiar with the matter.

The Redwood City, California-based company sold 15.5 million shares Tuesday for $42 apiece after marketing them for $36 to $38, said the people, who asked not to be identified because the information wasn’t public yet. Based on the outstanding shares listed in its filings, the company will have a market value of about $4 billion at $42 a share.

A representative for C3.ai didn’t immediately respond to a request for comment.

C3.ai has said that big name backers including one of its partners, Microsoft Corp., would acquire shares in a private placement as part of the listing.

Spring Creek Capital, an affiliate of Koch Industries, planned to buy $100 million in common stock while Microsoft would buy $50 million of them at the IPO price, according to an earlier filing.

Earlier this year, C3.ai formed a partnership with Microsoft and Adobe Inc. for a new customer-relationship management software seeking to combat Salesforce.com Inc.

C3.ai’s offering is being led by Morgan Stanley, JPMorgan Chase & Co. and Bank of America Corp. The company’s shares are expected to begin trading Wednesday on the the New York Stock Exchange under the symbol AI.

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>>> C3.ai - >>> In 2009, Siebel founded C3.ai, originally to provide enterprise software for energy management.[21] C3.ai currently provides an enterprise AI software platform and applications for multiple commercial uses, including energy management, predictive maintenance, fraud detection, anti-money laundering, inventory optimization, and predictive CRM.[22] Its customers include 3M, Royal Dutch Shell, the US Air Force, and New York Power Authority.[23][24] C3.ai was included in the 2019 “CNBC Disruptor 50” list, with a valuation of $2.1 billion.[25]

Enterprise AI software applies artificial intelligence methods, such as machine learning and neural networks, to solve complex analytical problems in commerce, industry, and government.[26] Organizations use enterprise AI software to increase efficiencies, reduce costs, and improve operations.[27] The US Air Force, for example, uses AI to predict engine failure in aircraft before a failure occurs in order to improve maintenance and increase aircraft readiness.[24]


https://en.wikipedia.org/wiki/Thomas_Siebel#Siebel_Systems

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>>> 7 Penny Stocks Worth the Danger as Pandemic Catalyzes Growth

These seven penny stocks have the right catalysts, business models, and tailwinds


Investor Place

By Alex Sirois

Jul 31, 2020


https://investorplace.com/2020/07/7-penny-stocks-worth-the-danger-as-pandemic-catalyzes-growth/


Investing in penny stocks is primarily the domain of highly risk-averse market participants. The risk profile of penny stocks is, of course, a double-edged sword: investors could lose a lot of money on them, yet could also reap massive returns. Many investors do consider penny stock purchases, but there are significant differences between trading them and higher-priced stocks.

We reached out to Finance Professor Andrei Simonov at the Eli Broad College of Business at Michigan State University. We wanted to know whether he believes penny stocks to be a worthwhile investment, or if they are simply too risky to merit a position within one’s respective portfolio.

Simonov wrote:

By ‘Penny Stocks’, different people understand different things. Mostly, it is the term used for “microcaps” or “nanocaps” sometimes not listed on any national exchange, mostly illiquid with high trading cost (Bid-Ask Spread) and high price impact of the trade. That would be OK, but in many cases, this is paired with a lack of verifiable fundamental information. That makes Penny Stocks prone to manipulation and different kinds of fraud. I believe that most small individual investors should avoid those stocks. However, there are other examples. In 2009, Citigroup was formally a penny stock. Granted, it was a highly speculative investment at a time. But “fallen angels” like that are worth looking at.

Professor Simonov clearly falls nearer the conservative end of the investor spectrum, which is understandable given his position. It’s true that penny stocks often lack the transparency and long financial track records of large-cap stocks. And yes, penny stocks will remain subject to unscrupulous businessmen who maliciously issue penny stocks with fraudulent intent. Thus, investors do need to tread carefully and conduct as much due diligence as possible in this asset class. With common sense and due diligence penny stock investors can succeed.

Volatility is high across markets. Interest rates are low. Investors are facing risk no matter where they look, and the investment landscape isn’t what it was a few years ago. It may be time to give penny stocks another look. Nevertheless, there are not only ‘fallen angels’ as Simonov suggests, but also emerging champions within the sector also worthy of investor speculation.

For the risk-averse investor here is a list of seven penny stocks worth the risk:


Boxlight Corporation (NASDAQ:BOXL)

Biocept Inc. (NASDAQ:BIOC)

Ampio Pharmaceuticals (NYSEAMERICAN:AMPE)

eMagin Corporation (NYSEAMERICAN:EMAN)

Lynas Corporation Limited (ASX:LYC)

Ucore Rare Metals Inc (OTCQX:UURAF)

Byrna Technologies (CNSX:BYRN)



Bear in mind that these stocks all have catalysts making them worth a look. In many cases, a single macroeconomic catalyst alone will trump all other factors when evaluating penny stocks. For example, the stock of a company that benefits from a new federal mandate may provide massive returns after years of lackluster performance. Therefore, an appetite for risk, some luck, and calculated hedging of bets can equate to massive windfalls in penny stocks.


Boxlight Corporation (BOXL)

Education is undergoing a big transformation around the world. And technology has been the darling of the pandemic. Fotunately, EdTech sits squarely at the confluence of these two sectors. Investors are curious to know what stocks exist therein.

Boxlight Corporation is one such company. Like most small-cap stocks, they aren’t a household name. The company develops and services eLearning software for the classroom. Essentially, this firm will seek to establish itself as a leader in this burgeoning sector. Their solutions include interactive digital software, 3D printing and robotics STEM-related assets, and certifications to name a few. Among them is its MimioConnect cloud platform for remote teaching and learning.

In early July the company announced the appointment of two board members who should provide great direction. They have multiple decades of experience at highly respected forms in the industry.

The firm also recently won two excellence awards from Tech & Learning magazine. Boxlight corporation has developed a lot of software and resources which give it many avenues to rise. BOXL shares eclipsed $4 per share in early July after having traded around $1 for the previous year. Current shares are near $2.65.


Biocept Inc. (BIOC)

Given the search for a Covid-19 vaccine, this list could have easily been all biotech penny stocks. There are many exciting sectors and stocks elsewhere, but here I will focus on two of them.

Biocept is a company involved with a Covid-19 vaccine. Primarily, the company deals with cancer diagnostics. The firm is undertaking a vote in order to do a reverse split of its stock to raise its price above the NASDAQ $1 minimum closing bid requirement. It will be delisted if shareholders vote against the reverse split. Clearly it is a volatile stock, yet it serves a noble cause in an important market.

Biocept’s involvement with a vaccine is bound to pique the interest of speculative investors. The company has assembled a Covid-19 testing kit which will be available in Q3 2020. It is clear the company is attempting to remain relevant with these two latest moves.


Ampio Pharmaceuticals Inc. (AMPE)

Ampio Pharmaceuticals is another biotech company that is throwing its hat in the Covid-19 ring. Its primary business is the development of anti-inflammatory drugs against disorders including osteoarthritis and diabetic eye issues.

Ampio Pharmaceuticals has been active in the news in the last week as it relates to the pandemic. Additionally, Ampio’s drug Ampion is being touted as a treatment against inflammatory syndromes related to Covid-19. The company published a study to that effect on July 20. On July 23 it enrolled patients into its Ampion Covid-19 Program.

Should the results prove positive, this stock could rocket upwards from its current $1.17 price.


eMagin Corporation (EMAN)

eMagin produces OLED microdisplay technology. Its organic light emitting diodes have application in military, consumer, medical, and industrial markets. The company’s share price has been marching solidly upward in a consistent channel pattern for the past year, having risen from 32 cents to roughly $1.20. Such a 300% price increase is certain to entice more investors.

Unlike some other penny stocks, EMAN shares have lots of financial information with which to conduct due diligence.


Lynas Corporation Limited (LYC)

Lynas Corporation is a rare earths miner. There are many such companies, but what sets Lynas apart is one powerful catalyst: its strategic partnership with the U.S. Government.

The U.S. Government is worried about its ability to produce strategically important minerals. It is particularly worried about its over-reliance on China for strategic minerals used across industries. To that end it has given a contract to Lynas, an Australian company with significant operations in Malaysia. The contract will allow Lynas to begin building a heavy rare earth separation facility in Texas.

When completed, the facility will be the only plant which can separate such metals outside of China. This should make clear the strategic importance of the contract. This looks like a potentially huge business with massive growth potential.

Shares currently trade in the $2.50 range but jumped on the news. The Texas facility design will be ready sometime in 2021. U.S.-China tensions will dominate headlines perhaps for several decades. Thus, shares in companies like Lynas, which benefit from that reality, have great potential to grow for a long period.


Ucore Rare Metals Inc. (UURAF)

Ucore Rare Metals may rise for the same reason that Lynas has risen. However, this seems to be much more speculative. Lynas is clearly a legitimate company with real operations. Ucore has much less transparency behind it. Its website is very thin on information. Nevertheless, it is a stock to keep an eye on.

The company has supposedly developed a new, efficient process for separating and purifying rare earth elements. If it indeed aligns itself with U.S. national defense and can deliver, it should rise exponentially.


Byrna Technologies (BYRN)

Byrna Technologies is attempting to fill a void in the self-defense market. The company produces what looks like a gun that fires bullets but actually fires chemical irritant projectiles. Basically, pepper spray paint balls. The company is trying to fill the void between close-range pepper spray, and longer-range guns which fire lethal bullets. Further, the projectiles are non-lethal and are intended to disarm attackers, or give users ample time to flee.

Byrna may have cornered a large market of American self-defense consumers. Many Americans do not want the responsibility and potential liability associated with gun ownership. However, they do want to protect themselves. Byrna’s products neatly provide a solution for these consumers. Therefore Byrna may have identified a lucrative revenue base. Byrna’s shares have traded below 50 cents CAD since 2013. Shares only recently rose to around 1.70 CAD in June.

It may be time to give a few of these penny stocks a serious look. Investors are facing volatility with most any stock. Therefore, now may be as good a time as any to take a risk. These shares are a good place to start.

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>>> INTERVIEW: Fintech Company Coro to Launch Gold Payments App as it Prepares for Nasdaq Listing


IPO-Edge.com

July 21, 2020

By John Jannarone


https://finance.yahoo.com/news/interview-fintech-company-coro-launch-120008237.html


For most investors, the only sensible ways to own gold are to buy ETFs like SPDR Gold Shares (ticker: GLD) and iShares Gold Trust (ticker: IAU) or perhaps put coins and bars in a safe. But none of those options can help turn gold into a currency that’s convenient for payments.

Soon, gold payments will become much easier thanks to Coro Global Inc., which currently trades on the OTCQB (ticker: CGLO) and expects to soon begin trading on Nasdaq (ticker: CORO). Coro plans to launch an app on August 1 that will initially allow users to not only buy and sell gold, but make payments between each other as they might on PayPal Holdings Inc.’s Venmo – in dollars or gold.

In an interview with IPO Edge, Coro CEO J. Mark Goode explained that the company complies with regulators at three levels: The Securities and Exchange Commission (SEC), FinCEN at the U.S. Treasury, along with state banking and finance regulators. Coro also has a robust “know your customer” framework designed to reduce the risk of any bad actors joining the platform. And for even more peace of mind, customers can request that physical gold in their accounts be sent to them at any time.

Looking ahead, Mr. Goode sees opportunity in B2B payments and to enter international markets, starting with Mexico and Canada. The full interview is below:

IPO Edge: Who is the initial target user for the Coro app and is there a minimum amount of money needed to use it?

The initial Coro users will be U.S. individuals making payments between each other. Our users will have the ability to send and receive U.S. Dollars (USD), and for the first time, the same ability to send and receive gold (XAU). Coro has democratized access to gold for every user, regardless of income, wealth or financial experience.

After the U.S. roll-out to individual customers, Coro will focus on opening up access to business users and merchants for B2B/B2C transactions. Coro’s technology allows users to transact in U.S. dollars (USD) or gold (XAU) in increments as small as a penny. In 2021 Coro expects to expand to users in Mexico and Canada.

IPO Edge: Can Coro accommodate very large transactions in addition to small exchanges between friends as on Venmo?

Yes, our next generation AML/KYC compliance technology allows for careful due diligence and evaluation of all new Coro users during the onboarding processes. Our AML/KYC tech allows for the customer due diligence to be accomplished rapidly and efficiently, while ensuring a positive and convenient user experience. This enhanced due diligence during the onboard process, as well as sophisticated ongoing transaction monitoring technology, provides our users with the opportunity to transact in small amounts and at higher values.

IPO Edge: How quickly can someone be approved to begin using the app once it’s launched?

Users are able to download and enroll with Coro in a matter of minutes. Our customer verification and background check process is fully automated and contained within the mobile application. The customer enrollment experience is 3 minutes, or less.

IPO Edge: Have you taken steps to “know your customer” so to prevent bad actors from using Coro?

Yes, as mentioned above, we have built Coro on a strong foundation of compliance. Our AML / KYC solution for onboarding new users and monitoring their ongoing transactions for suspicious activity is cutting edge technology. Our AML/KYC technology monitors international compliance watchlists in real time and alerts Coro’s experienced compliance team so that they may take action.

IPO Edge: Have you had interest from potential users ahead of the app launch?

On a pre-launch basis, interest from prospective users has been very positive. During the past month approximately 3,500 interested Coro users have pre-registered on our website (visit: http://www.coro.global/). Commentary from the pre-registered users regarding the opportunity to own and send gold has been enthusiastic. The idea of reliable gold money is connecting with people. As mentioned previously, Coro will be launched on a commercial basis this summer.

IPO Edge: What kinds of regulatory requirements were necessary to launch?

Coro is regulated on three levels. First, as a public company we are regulated by the Securities Exchange Commission. Second, we are registered and regulated as a money services business by FinCEN at the U.S. Treasury. Third, Coro is regulated by state banking and finance regulators as a money transmission company. Regulation at both the Federal and State levels will enhance trust and confidence for Coro users.

IPO Edge: Can users request physical gold be sent to them from their accounts?

Yes, Coro users will have the opportunity to withdraw their gold for home delivery. The functionality for withdrawal and delivery will be implemented this year after our summer launch. All gold within the Coro user accounts belongs to our customers. The gold is fully allocated, insured and held by an independent vaulting custodian.

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GrowGeneration Corporation (GRWG) - Oppenheimer: These 2 “Strong Buy” Stocks Are Poised to Surge by Over 80%


July 17, 2020


https://finance.yahoo.com/news/oppenheimer-2-stocks-poised-surge-135427733.html


GrowGeneration Corporation (GRWG)

Taking its place as the largest hydroponic equipment supplier in the U.S., GrowGeneration owns and operates specialty retail hydroponic and organic garden centers. Given its strong long-term growth narrative and its $6.95 share price, it’s no wonder GRWG recently earned a thumbs up from Oppenheimer.

Covering the stock for the firm, 5-star analyst Brian Nagel likes what he’s seeing, to put it lightly. “GRWG represents a leading, yet still early stage, up-and-coming retail chain within the rapidly expanding and dynamic market for hydroponic and organic gardening supplies,” he noted.

Speaking to its footprint, the company operates 27 stores in ten states. That said, over the next few years, Nagel estimates that new store additions, including acquisitions and greenfield expansions, could approach more than 20 units per year, putting its total number of locations at over 90 stores by 2023.

To help it reach its targets, the company is putting advanced infrastructure in place. As part of these efforts, GRWG implemented a new ERP system, and in June, the stores were connected to its website, allowing for BOPUS and other functionality.

Expounding on this, Nagel stated, “Key to our initial positive outlook for GRWG is our view that the GRWG business model is now approaching a point of increased sustained underlying scalability... Our initial analysis suggests that, as GRWG accelerates further acquisition and organic expansion efforts, the company should increasingly capitalize upon scale-related synergies and over time deliver even better profit and cash generation.”

Additionally, after an all-primary, secondary equity offering, GRWG’s cash position lands at over $52 million, with only $314,000 in short- and long-term debt. Based on this, Nagel thinks that the company should be able to fund its near- and longer-term expansion objectives.

With the analyst projecting that through 2023, adjusted EBITDA will reach roughly $55 million on total company revenue of more than $400 million, Nagel doesn’t believe GRWG’s full value has been built into the share price.

To this end, Nagel rates GRWG a Buy along with a $15 price target. This target indicates shares could skyrocket 110% in the next year. (To watch Nagel’s track record, click here)

Turning now to the rest of the Street, other analysts are on the same page. Only Buy ratings, 5, to be exact, have been issued in the last three months, so the consensus rating is a Strong Buy. The $10.20 average price target puts the potential twelve-month gain at 42%. (See GrowGeneration stock analysis on TipRanks)

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Reed's - >>> Edited Transcript of REED earnings conference call or presentation


May 11, 2020


https://finance.yahoo.com/news/edited-transcript-reed-earnings-conference-103915724.html


Thomson Reuters StreetEvents Thomson Reuters StreetEventsJune 11, 2020
Q1 2020 Reed's Inc Earnings Call

LOS ANGELES Jun 11, 2020 (Thomson StreetEvents) -- Edited Transcript of Reed's Inc earnings conference call or presentation Monday, May 11, 2020 at 8:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* John J. Bello

Reed's, Inc. - Independent Chairman of the Board

* Neal Cohane

Reed's, Inc. - SVP of Sales

* Norman E. Snyder

Reed's, Inc. - CEO & Director

* Thomas J. Spisak

Reed's, Inc. - CFO

================================================================================

Conference Call Participants

================================================================================

* Anthony V. Vendetti

Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst

* Dan Joseph;Corridor Ventures;Owner

* David Brian Bain

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

* Leon Michael Zaltzman

Union Square Park Capital Management, LLC - Portfolio Manager

================================================================================

Presentation

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Operator [1]

--------------------------------------------------------------------------------

Good afternoon and welcome to Reed's First Quarter Fiscal 2020 Earnings Conference Call for the period ending on March 31, 2020. My name is Taylor, and I'll be your conference call operator today. Today's call is limited to 1 hour, and we will have prepared remarks from Norm Snyder, Reed's Chief Executive Officer; and Tom Spisak, Reed's Chief Financial Officer. Following management's remarks, they will take your questions.

Before we begin today's call, I have a safe harbor statement to read our listeners. I would like to remind our listeners that during this call, management remarks may contain forward-looking statements and that management may make additional forward-looking statements in response to your questions. Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievements to be materially different from those anticipated by such statements.

These factors include, but are not limited to, the company's ability to manage growth, manage debt and meet development goals, reduction in demand for our products, dependence on third-party manufacturers and distributors, changes in the competitive environment, access to capital and other detailed from time to time in our filings with the United States Securities and Exchange Commission. Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. In addition, any projections as to the company's future performance represent management's estimates as of today, May 11, 2020. We assume no obligation to update these projections in the future as the market conditions change.

Additionally, please note non-GAAP financial measures referenced during this call are reconciled to our comparable GAAP financial measures in the press release and supplemental materials filed with the SEC and is posted on our website at investor.reedsinc.com. Non-GAAP financial information is not meant as a substitute for GAAP results but is included solely for informational and comparative purposes. We present modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of core operating performance.

I would now like to turn the call over to Mr. Snyder. Please go ahead, sir.

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Norman E. Snyder, Reed's, Inc. - CEO & Director [2]

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Thank you, and good afternoon, everyone. It's a pleasure to join you today. We had a strong first quarter, generating 13% net sales growth and volume gains in both the Reed's and Virgil's brands. We narrowed our first quarter net loss compared to the prior year, as a result of continued focus on brand growth and SG&A reductions and gross profit improvement. We have established a strong production network with bicoastal capabilities and redundancies that improve significant capacity to support growth. We strengthened our balance sheet with a successful recent capital raise, and we continue to deliver exciting new product innovation.

We have positioned ourselves to capitalize on the large and growing Ginger Ale market, which is 10x the size of the Ginger Beer category, and we have seen an overwhelmingly positive response in the launch. The introduction of Ginger Ale is on pace to be our most successful launch to date and has already seen 3x the initial placement of our Virgil's Zero Sugar launch.

Our team is quickly and effectively adapted to the challenging COVID-19 environment, and we are delivering uninterrupted service to all of our customers. We are bullish about our prospects for 2020 and beyond and are delivering against each of our core objectives and are laser-focused on reaching cash flow breakeven.

Let me run through our first quarter accomplishments and our current business trends. As I noted, we produced volume growth in both the Reed's and Virgil's brands. The growth was led by Reed's, where volume increased 21%, driven by the continued growth of Reed's Extra Zero Sugar during the quarter. We are seeing a broad-based positive response to our Zero Sugar innovation with distribution and velocities accelerating. We have significant incremental opportunity as we achieved 1/3 of the penetration of our existing distribution at this point and already seeing a strong impact on our sales of the Reed's brand.

At the end of the first quarter, we began our initial shipments of Reed's Real Ginger Ale, providing entry into the $1.2 billion category that is the fastest-growing segment of the carbonated beverage category with an 8% compound annual growth rate over the last 4 years. Reed's Real Ginger Ale is delivering real ginger to the category with a superior taste and quality. The launch is being supported with social media, as retail support has been understandably impacted by COVID-19.

As I noted, we have seen a robust retailer response, with retailers taking both SKUs, Real and Real Zero Sugar. And we continue to build distribution over the coming quarters. We already have opened 3,000 doors, including Walmart, Food Lion, Giant Eagle, Albertsons, Safeway and Sprouts. We have additional retailers slated for shipment, including many small regional, national and specialty retailers around the United States. Other large retailers that have confirmed acceptance are as follows: Kroger, Stop & Shop, Shaw's, Hannaford, NEXCOM, which is the Navy Exchange, Haggen, Ingles, Lowe's, Tops, The Fresh Market, United Supermarkets, WinCo and Raley's. We believe we have a unique and superior positioning in this large and growing category and see Ginger Ale as a potential game changer for the Reed's brand.

Additionally, Ginger Ale is positioned to deliver an enhanced margin profile and is the first new product we have rolled out in our network where we have the ability to significantly bring down production costs. Our new innovations are driving accelerated growth of the Reed's brands at retail. For example, in the 4 weeks ended March 22, Reed's dollar sales increased 26.2% in IRI multichannel outlets, up from 8.1% over the trailing 12-week period. In April, we saw further acceleration with dollar sales up 32.4%, with higher velocities and increased ACV growth.

Another of our most recent innovation, Reed's Ginger Wellness Shots, is also performing well across both retail and online. Our e-commerce platform, which includes our branded websites, is now active and growing. We are also seeing strong sales through Amazon, where we did more volume in the last 30-day period than we did all of last year. We are selling our Ginger Ale, Ginger Shots, Ginger Candy and Virgil's Zero Sugar line on Amazon.

Finally, our partner, Full Sail Brewing, continues its targeted rollout of Reed's Ready-to-Drink Mules. Initial distribution occurred in March, with planned expansion shortly thereafter. But that has been somewhat delayed due to the COVID-19 environment. But as we discussed last quarter, the product is already in selected West Coast retailers, and we are encouraged by the response.

Beyond our strong distribution gains for both Real Ginger Ale and our Zero Sugar line, we continue to have success broadening our channel exposure. Our sales team is driving new distribution in liquor stores around the country, including placement of our new innovation, Reed's Extra Ginger beer cans, Reed's new Real Ginger Ale, Reed's -- new Reed's Real Ginger Ale cans and Reed's Extra Zero Sugar bottles into Total Wine & More and BevMo. Additional one-off wins are adding to our ever broadening availability.

Turning to Virgil's. We generated 2% volume growth during the first quarter and are seeing accelerated velocities at retail over the recent 8 weeks. During the 4 weeks ended March 22, Virgil dollar sales were up 20.9% in IRI multichannel outlet data, up from 17% over the trailing 12-week period. Sales at retail experienced further acceleration during the 4 weeks ended April 19, with Virgil dollar sales up 24.7%.

Our success driving accelerated volumes is a reflection of both higher velocities and new account distribution growth. This growth has being supported by excellent execution across our supply chain and our enhanced co-packer network. We now have 5 of our 6 planned co-packers producing, and the sixth co-packer will come on later this year, as the launch has been delayed by COVID-19.

Our existing network has ample capacity and redundancies and has contributed to high order fulfillment rates and keeping pace with the rising demand we are seeing. Our organization is also intently focused on removing costs from the system, including more targeted and efficient marketing efforts, gross margin improvement and simplification that is benefiting all aspects of our operational execution. Delivery and handling costs are being managed more efficiently as our enhanced network allows us to have the right inventory at the right place and improved ability to effectively plan. We have also signed a long-term agreement for our ginger earlier this year, ensuring ample ingredient supply.

As I mentioned, we are focused on achieving cash flow breakeven through improved margins and continued land growth. We also now have the capital in place to support continued growth of the business following last month's successful capital raise.

Before I turn the call over to Tom to run through the financials, let me comment on the impacts of COVID-19. First, I want to thank all of our employees and partners for their successful navigation of the daily challenges, the pandemic presents. Our primary focus is and will continue to be on the health and safety of our employees and partners. The entire Reed's system responded quickly to the pandemic and has seen uninterrupted service to our customers. Each of our production partners is producing well, and our supply chain is secure. We have seen a positive impact on our sales in retail, given the strong supermarket sales trends overall, which is partially offset by the challenge of in-store merchandising and trade promotion.

Despite the inherent challenges, our sales force continues to drive new accounts and distribution growth. We will continue to monitor the situation and adapt quickly and effectively as the situation unfolds.

Now let me turn the call over to Tom Spisak to discuss the first quarter financial results. Tom?

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Thomas J. Spisak, Reed's, Inc. - CFO [3]

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Thank you very much, Norm. It's a pleasure to speak with everyone today. Let me echo Norm's comments that we feel very good about where the business is today, the strength of our innovation and the ability to drive growth in both sales and profit. We are delivering on our strategy to sell, save and simplify and are seeing strong execution as a result.

First quarter net sales increased 13% to $9.5 million compared with $8.4 million in the prior year. Core brand gross sales increased 12% over the prior year. As a result, 11% core volume growth, including 21% case growth for the Reed's brand and 2% case growth for the Virgil's brand.

Gross profit dollars increased 15% to $2.9 million compared to $2.5 million in the prior year, and gross margin increased 50 basis points to 30.1%.

Delivery and handling costs increased 23% to $1.3 million during the first quarter of 2020 compared to the prior year, driven by the volume growth and short-term market forces associated with COVID-19. As Norm mentioned, we are positioned for more favorable delivery and handling costs beyond the near-term COVID impact, as a result of our expanded co-packer production capabilities on both coasts.

Selling and marketing costs decreased 4% to $1.9 million during the first quarter and as a percentage of net sales, decreased to 20% from 24% in the prior year. The decrease reflects our ongoing cost control and reduced marketing programs compared to the prior year. Our more targeted marketing efforts are also delivering improved ROI on our spend.

General and administrative expenses decreased 19% to $1.9 million in the first quarter compared to $2.4 million in the prior year period. The year-over-year decrease largely reflects last year's onetime costs associated with the 2018 sale of our Los Angeles facility and reduction of temporary staffing. The first quarter operating loss narrowed to $2.3 million from $2.9 million in the prior year.

Interest expense was consistent with the prior year at $300,000. And the net loss improved to $2.6 million or $0.05 per share in the first quarter of 2020 compared to a loss of $3.3 million or $0.11 per share in the same period last year.

Modified EBITDA loss improved to $1.4 million compared to a loss of $2.3 million in the prior year period.

Moving to the balance sheet and cash flows. We ended the first quarter with $3 million of availability on our revolving line of credit. Subsequent to the end of the first quarter, we completed an equity offering of 15.3 million shares, raising gross proceeds of $5.8 million after exercise of the overallotment. During the first quarter, we used $2.4 million of cash in operating activities compared to using $8.8 million in the prior year period. The decrease in cash used in operating activities during the first quarter of 2020 relates primarily to a lower net sales loss -- a lower net loss and a decrease in finished case goods inventory.

Turning to our 2020 outlook. We continue to anticipate generating 10% core brand net sales growth over fiscal 2019 or approximately $37.2 million. We also continue to anticipate a gross margin of approximately 32% for the full year compared to 23.3% in the prior year. Our guidance does not assume any material incremental challenges, as a result of COVID-19, which is clearly difficult to forecast.

Now let me turn the call back to Norm for some concluding remarks. Norm?

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Norman E. Snyder, Reed's, Inc. - CEO & Director [4]

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Thanks, Tom. Let me conclude with our confidence in our business outlook and our ability to drive growth and progress towards cash flow breakeven. The entire organization is focused on continuing to execute effectively and efficiently, controlling costs, improving gross margin and leveraging our significant innovation and strong brands.

We had a strong first quarter and are bullish on our 2020 outlook. We are seeing stronger momentum at retail, have a significant opportunity with the recent launch of Reed's Real Ginger Ale and growing our accounts and our footprint within our customers. We have significantly enhanced our supply chain and co-packer network, have strengthened our balance sheet and have the team in place to deliver an exceptional execution. We look forward to further growth and driving improved profitability.

I will now hand the call over to the operator to begin the queue for the question-and-answer session.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

Your first question comes from David Bain from Roth Capital.

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David Brian Bain, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [2]

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I guess, Norm, since Ginger Ale was essentially introduced at the end of the first quarter, if we look at the 4-week IRI data ended April 19 for Reed's and assuming Reed's core sales are continuing at kind of that 20% with no pricing increases, is the remainder of the uplift to the 31%, is that mainly Ginger Ale?

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Norman E. Snyder, Reed's, Inc. - CEO & Director [3]

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No, David. Actually, Ginger Ale is still really early to judge. And it's really -- I'm happy to say the Reed's portfolio is performing very well across the board. And it's really -- it's the lift of our existing brands with a very small impact from Ginger Ale.

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David Brian Bain, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [4]

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Okay, great. And just going a little bit deeper with that, with the mix trends with Virgil's and Reed's. I mean, I can assume cans and Zero are, I don't know, I mean, 25% of Virgil's at this point. Where do you see that going, as we more deeply enter additional channels like C-stores? And have you seen any cannibalization to the bottles?

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Norman E. Snyder, Reed's, Inc. - CEO & Director [5]

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No, not really. In terms of the cannibalization, I mean, I think, there are 2 different drinkers, clearly. We've done a lot of research to prove that out. Obviously, people, particularly now, are more concerned about health and better-for-you products. I think, that plays into that space well. I think the Zero Sugar entries are going to really be catalysts for a lot of our growth, both on the Reed's and Virgil's side.

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David Brian Bain, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [6]

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Right. Okay. Perfect. And then, I guess last one. Tom, could you give us a sense as to kind of the total current liquidity with the PPP loans? And any opportunities to augment your credit lines?

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Thomas J. Spisak, Reed's, Inc. - CFO [7]

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So as far as augmenting the credit line, that's something we're going -- continuing negotiations on. So we're not in that stage right now. As part of the raise, we had $5.8 million that we netted plus PPV (sic) [PPP] of $770,000. So in addition to that, we have approximately $2.5 million on the revolver right now, in addition to those 2 other pieces. So the $5.8 million, the PPP loan, and then we have additional $2.5 million on the liquidity. Revolving...

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David Brian Bain, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [8]

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Alright. Congrats on the quarter and the outlook.

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Operator [9]

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Your next question comes from Anthony Vendetti from Maxim Group.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [10]

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Just wanted to talk a little bit about some of the wins maybe this quarter. Any big distribution wins or customer wins that you signed this quarter?

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Norman E. Snyder, Reed's, Inc. - CEO & Director [11]

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I'm going to let Neal Cohane answer that question, Anthony.

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Neal Cohane, Reed's, Inc. - SVP of Sales [12]

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Yes. I'll say right now, we're seeing a very early and good acceptance of our brands. So specifically for Zero Sugar Extra, which is in the glass bottle, and our Zero Sugar Reed's, both Extra and Zero Extra cans, along with the Ginger Ale. Ginger Ale is being picked up by almost -- and I will say everybody we've come in contact with so far. We are seeing Walmart right now is loading in. You'll start seeing them load in. You might even see it off shelf, our 8-pack Ginger Ale and Zero Ginger Ale at Walmart. You're going to see it very shortly at Kroger. You're going to -- national chain, 1,700-plus locations. Just about every single Albertsons division has accepted, and we're just waiting for on shelf for those accounts. Food Lion, we're doing a complete focus, really deep dive focus at Food Lion. And you're talking over 1,000 stores.

We partnered up with and added some strong marketing to kind of separate ourselves versus the mainstream, mainstage ginger ales. You're going to start seeing us go on end caps and new item end caps in all Food Lion, shortly. That's just a few of the wins. I could really go on and on, on that.

On top of -- we've been hitting the phones hard, Anthony. I think there's a lot of detail -- I think there's a new paradigm being broken here, which is telesale, telemarketing is going to be kind of the wave of the immediate future. We've had some very good success connecting with all buyers. But we're really on a deep dive into liquor stores and trying to get our new cans, our new Reed's Zero cans, Reed's Ginger Beer cans, Extra and Zero Extra.

So we're opening up liquor stores across the country. We're targeting Southern California, Pac Northwest, the Northeast. And we're starting to make a real impact on probably upwards to 500 liquor stores over the last, call it, 2, 3 months, just dropping product on the floor and having our distributors taking orders on the phone and having our distributors follow up and deliver. So good news on that front.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [13]

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That sounds great. So it sounds like there hasn't been, based on this call, any negative repercussions from COVID-19 in terms of your business. And it sounds like you've been able to, whether it's remotely or through telemarketing or your own teleconference calls or virtual calls, being able to sign up new customers. Has there been any other benefit from customers increasing purchases of certain products? Can you comment a little bit on your Wellness Ginger Shots? Have you seen any uptick there or any other positive impact on your business from the COVID-19 pandemic?

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Norman E. Snyder, Reed's, Inc. - CEO & Director [14]

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Well, most of the impact on the Shots we've seen at -- through our e-commerce online platforms. I mean, it's still early in the bricks-and-mortar stores to really make a judgment. But the reaction online, which -- similar to a lot of other brands and companies as online activities picked up, and we've had a real, I'd say, brisk start to that.

But I also want to -- I also want to mention that we have had some COVID-19 impact on our sales. I mean there's been some delays of resets. Luckily, our initial resets were done. And some of them were done early, others on time and slight delays. So we're navigating that. We haven't seen anything develop that's material. So we remain optimistic that we'll stay on schedule, but that's something that we're going to keep a real keen eye on to make sure that we're not delayed. We have the authorizations. And now it's getting on the shelf.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [15]

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Okay, that's helpful. But nothing material so far, correct?

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Norman E. Snyder, Reed's, Inc. - CEO & Director [16]

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No, nothing there.

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Operator [17]

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Your next question comes from Dan Joseph from Corridor Ventures.

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Dan Joseph;Corridor Ventures;Owner, [18]

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Congratulations on a great quarter. That's terrific news, especially all that distribution and the sell-through. It sounds like you guys have really turned things around. Can you elaborate, if you will, on the ginger strategy, which appears to be the leading focus for the business now? And if so, what's the strategic direction in the plan for Virgil's?

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Norman E. Snyder, Reed's, Inc. - CEO & Director [19]

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Yes. Okay. So there's really -- there's 2 parts to that. So I'm going to break that down in the ginger strategy. Ginger is a well-known super food. It's a plant-based item, which is very popular and a growing trend. Obviously, there are several identified benefits to ginger. And as I said earlier, consumers are looking for better-for-you type products. And there's nothing better than ginger, obviously. So -- and we use -- we're very unique and we use fresh ginger in all of our products. There's no extracts. It's Peruvian ginger. And obviously, the health benefit.

So to the extent we can make that known without overstepping our bounds and making claims, I mean, we obviously do that. There's a lot of precedent that are doing a good job for us, telling consumers. But I think people are just more keen to products that are better for you. And it's a trend that's been going on for the last 5 to 10 years. Obviously, it's been accelerated, I think, because of the environment that we're in. And we want to take full advantage of that. So obviously, we are using that angle, both the benefits of ginger and the fact that we have fresh ginger in our product.

Now obviously, as it relates to Virgil's, you don't have -- don't use fresh ginger. But again, it's a better-for-you product, and it fits within what we believe our corporate mission is. It's a pretty substantial piece of revenue and profitability for us and margin. So it contributes to what we're doing. So that remains a very prominent piece of our strategy. And obviously, we're seeing growth, particularly with our Zero Sugar line, and believe there is a lot more opportunity out there to take advantage of.

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Dan Joseph;Corridor Ventures;Owner, [20]

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Great. And how about -- just a one follow-up question on the financing front, going forward. How long is your cash runway? And what are your financing plans going forward? How are you going to approach that?

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Norman E. Snyder, Reed's, Inc. - CEO & Director [21]

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Well, as we said, when we raised the money, these funds will last us through this year and well into 2021. And we'll make a determination at that point, strategically, in which way we want to move forward. I mean one of the benefits, I feel a little conflicted here using the term benefit in this current environment, but we have saved a significant amount of cash in that trade spend, it's dramatically down because retailers just can't manage that and keep their shelves stocked. Our marketing is down to what we can do digitally and very cost effectively. And our travel has been shut down.

So that with growing gross margin contributes more cash to the kitty, obviously, as these restrictions start to lift, and we feel that we can safely conduct ourselves, we'll do so. But we're spending less money than we originally anticipated, and that money will obviously extend the runway that we have now. So too early to make a decision. We'll do that, like I said, probably sometime middle of next -- middle to latter part of next year, but feel really good about the position we're in presently.

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Operator [22]

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Your next question comes from Leon Zaltzman from Union Square Park Capital.

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Leon Michael Zaltzman, Union Square Park Capital Management, LLC - Portfolio Manager [23]

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Congratulations on what appears to be a very successful launch for the Ginger Ale offerings. I was wanting to ask, have you seen any cannibalization on these bigger accounts when they place orders for the Ginger Ale? Are they placing less orders for the Ginger Beer? Is it incremental? Any color that you can provide there would be helpful. Maybe Neal can do that.

And then for Tom, is it possible, maybe, to spend just a little bit of time walking -- talking about our path to cash flow breakeven? What do we need to do? And what is a reasonable expectation on attaining that?

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Norman E. Snyder, Reed's, Inc. - CEO & Director [24]

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You know what, let me start with those. The Ginger Ale and Ginger Beer are 2 totally different consumers. There's not a lot of overlap. So what we're seeing is really incremental ordering. And if you look, particularly, if you look at the scan data, where we're seeing really nice growth with our Ginger Beer, our Extra, our Zero Extra, our margin are stronger and original. So obviously, there's no impact for Ginger Ale cannibalizing that category. And again, we did a lot of research to identify who those drinkers are, and they are 2 totally different consumers. So we look this to all be incremental growth for us and then for our retail partners.

And let me start on the breakeven thing, too. So what we've looked at is when we achieve gross revenue between $60 million and $65 million, and our margins continue to get stronger, we'll be in a position to really move closer to breakeven. We have really detailed plans on how we're going to get both our margin growth and our revenue and product growth, which we're working through. And obviously, a key leg of that is the Ginger Ale, playing in that $1.2 billion category.

Another piece of it is our Zero Sugar Reed's lines, Zero Extra. Another component is the Zero Sugar Virgil's line, where we're seeing a lot of growth. And then we have -- if we tap into some of our existing brands, there's opportunities to continue to grow them. So we think the stable is there. It's really just executing our plan to drive that growth as well as drive margin improvements.

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John J. Bello, Reed's, Inc. - Independent Chairman of the Board [25]

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Yes. This is John Bello. I want to weigh in on the Ginger Ale side of this. From what we've seen, and I think, Walmart is a good example, all the distribution that we gained on Ginger Ale has been incremental to our base brands. So we think that's just broadened our base and it's broadened our distribution footprint. And that just reflects what Norm said that it's a different consumer. The products are fundamentally different. They all have ginger. We're all building on the everything ginger platform, which we think will be appealing to strategic, somewhere down the line and to consumers. So I think that just really underscores that this is broadening our presence at retail incremental to what we already have.

Neal, you can jump in on that if you want to underscore that.

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Neal Cohane, Reed's, Inc. - SVP of Sales [26]

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Yes. No, I mean, everything I'm seeing right now as far as Ginger Ale versus Ginger Beer, it is all incremental. I'll certainly back that up. It's what makes it very exciting right now. But the other nice thing is the -- it could potentially be margin -- if there were some trading, it could be margin-enhancing for us, which makes it even better. I've seen companies introduce cans and didn't do their homework properly and started trading high profitable bottles for lower-margin cans. We did not do that. We went in with eyes wide open, and it's going to be nothing but a positive for us.

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Norman E. Snyder, Reed's, Inc. - CEO & Director [27]

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And to Neal's point there, and I mentioned it in my remarks, but I didn't want to really emphasize it. We signed a long-term supply agreement with our ginger supplier. We do not use Chinese ginger. We use organic Peruvian ginger for all of our drinks. So we believe, we're covered from a supply standpoint. We also have some backup suppliers in the event of an issue, but we haven't experienced any issue. In fact, the growing season is over, and we're fully stocked in terms of ginger for the balance of the year.

And as Neal said, particularly with the Ginger Ale, we're using this as a blueprint moving forward. That's been the first product where we've been able to enact some really significant savings from a margin standpoint.

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Operator [28]

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Your next question comes from [Michael Topout] from [SBY].

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Unidentified Analyst, [29]

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So I wanted to -- there seems to be a big theme here around cash flow and breakeven. I'd love to harken back, Norm, to your experience at SoBe in terms of whether or not there are similar patterns with Reed's versus SoBe and like how long it took for you to get it cash flow breakeven and what the main drivers were and if those things are going to recur here?

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Norman E. Snyder, Reed's, Inc. - CEO & Director [30]

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It's funny that you asked that question. Ironically, when we broke even, when we got over that threshold, we're at $65 million in sales and in the high 30s in margin. And we had really turned the corner. So I think that's probably where I see the similarities. This obviously is an established brand with a lot of equity. And we're really going to tap into that and really leverage it with innovation.

But if you look to -- consumers will tell you what they want. And I think we're giving them what they want in terms of better-for-you, healthier products that, by the way, taste great as well. So I think there's a lot of similarities from that point of view in terms of the size, scope and the margins. And it's funny that you asked that because I was thinking about SoBe today, and it was about the same time that it was -- I think, it was year 3 when we moved over to SoBe.

So the timing could also be somewhat parallel. We'll wait and see. But the objective is the same. We know how to do it because we've done it before. And we're going to employ the same set of learnings that we garnered for that experience, but it's about driving -- we've been consistent about driving top line. Margin is critical, and we're extracting margin. And I think, we're doing a good job of really watching our costs and challenging our folks to get desired ROIs before we spend dollar 1.

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John J. Bello, Reed's, Inc. - Independent Chairman of the Board [31]

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Yes. John Bello here. I just want to emphasize that one point of the Ginger Ale category is $10 million in revenue. Last year, our focus was very much on Ginger Beer, and one point of that was nowhere near that. It was $100 million business. The Ginger Ale category is $1.2 billion. Our key competition in that category is Zevia, $10 million of their -- $70 million in sales is Ginger Ale. We think we can do that because we believe there are people in that category based on our research that will pay a little more to get real ginger in their ginger ale. That's the play, and we feel good about that. Fishing in a much bigger ocean.

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Operator [32]

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Your next question is a follow-up question from David Bain from Roth Capital.

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David Brian Bain, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [33]

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Okay, great. I don't want to get too far ahead, especially, since we're beginning a major lift off with Ginger Ale, it looks like. And that's the tangible piece. But could you give us maybe a sneak peek on when or if flavored Ginger Ale may be added? And then maybe any other innovation that could launch before the end of the year? Are we kind of set at this point and everything else is under wraps perhaps? I'm trying to just get an idea of the road map there.

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Norman E. Snyder, Reed's, Inc. - CEO & Director [34]

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We're always thinking about that stuff. And we played with several iterations of Ginger Ale. So we could. We want to complete all of our research, and let's get the first product seated first before we go to the next.

I'll tell you -- I'll give you one snippet of something to look forward to during the year. Every morning, I look at consumer comments. And the one that I kept seeing the most was, "Do you guys still make Bavarian Nutmeg special edition root beer with the swing top to it?" And it goes back to my High Falls Brewing day, where we had this product called Genesee Bock Beer. And I actually found a can stuffed away in the brewery, and I said what was this? And the folks told me the story. And I'm like we're bringing that back. And that Bock Beer, if you go on the Genesee website, it is still being made today and a very popular item that people look forward to, annually.

So I think, based on the request for our Bavarian Nutmeg root beer, that could be one of our Genesee Bock Beer moments that where we're responding to consumers. We listen to them. We want to be engaged with them. And that's something that's on our agenda that we look forward to doing. And I think we're going to have a few fun moments that we could relate and get back closer to our consumer base.

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Operator [35]

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That is all the time that we have for questions today. I would now like to turn the floor over to Mr. Snyder for closing comments.

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Norman E. Snyder, Reed's, Inc. - CEO & Director [36]

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Thank you for your continued support and participating in today's call. We remain highly confident with our positioning, brands and opportunity, and we are seeing strong operational execution. We look forward to sharing our progress over the coming months and years. Have a great day. Thanks.

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Operator [37]

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This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

<<<

[gfp927z]

>>> Else Nutrition Announces Listing on Frankfurt Stock Exchange


CNW Group

June 12, 2020


https://finance.yahoo.com/news/else-nutrition-announces-listing-frankfurt-110000117.html


VANCOUVER, BC , June 12, 2020 /CNW/ - ELSE NUTRITION HOLDINGS INC. (BABY.V) (BABYF) (0YL.F) ("Else" or the "Company"), is pleased to announce that its common shares were accepted for listing on the Frankfurt Stock Exchange (FSE) under the trading symbol 0YL. The Company's common shares are now cross-listed on the TSX Venture Exchange, the OTCQB and the FSE. The FSE listing is expected to increase trading liquidity in the Company's shares, as well as to assist in attracting investment by institutional and retail investors in Europe.

About Else Nutrition Holdings Inc.

Else Nutrition GH Ltd. is an Israel -based food and nutrition company focused on developing innovative, clean and plant-based food and nutrition products for infants, toddlers, children, and adults. Its revolutionary, plant-based, non-soy, formula is a clean-ingredient alternative to dairy-based formula. Else Nutrition (formerly INDI) won the "2017 Best Health and Diet Solutions" award at the Global Food Innovation Summit in Milan . The holding company, Else Nutrition Holdings Inc, is a publicly-traded company, listed as TSX Venture Exchange under the trading symbol BABY and is quoted on the US OTC Markets QB board under the trading symbol BABYF. Else's Executive and Advisory Board includes leaders hailing from Abbott Nutrition, Mead Johnson, Boston Children's Hospital, ESPGHAN (European Society for Pediatric Gastroenterology, Hepatology and Nutrition). Plum Organics, Tel Aviv University's Sackler Faculty of Medicine, and Gastroenterology & Nutrition Institute of RAMBAM Medical Center.

For more information, visit: elsenutrition.com or @elsenutrition on Facebook and Instagram.

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>>> Innovation Pharmaceuticals’ Brilacidin Inhibits SARS-CoV-2 (COVID-19) by 97 Percent in a Human Lung Cell Line


GlobeNewswire

June 17, 2020


https://finance.yahoo.com/news/innovation-pharmaceuticals-brilacidin-inhibits-sars-113010429.html


Data From Ongoing Testing at U.S. Regional Biocontainment Laboratory

Data adds to growing body of research in both human and animal cell lines supporting Brilacidin’s robust antiviral properties against SARS-CoV-2
Brilacidin is a unique 3-in-1 antiviral, anti-inflammatory, antimicrobial COVID-19 drug candidate


WAKEFIELD, Mass., June 17, 2020 (GLOBE NEWSWIRE) -- Innovation Pharmaceuticals (IPIX) (“the Company”), a clinical stage biopharmaceutical company, reports today receiving data from ongoing laboratory testing being conducted at a U.S. Regional Biocontainment Laboratory (RBL).

Brilacidin exhibited a statistically significant (p<0.0001) and potent inhibitory effect on SARS-CoV-2, the novel coronavirus responsible for COVID-19, in a human lung epithelial cell line—reducing viral load by 95 percent and by 97 percent, compared to control, at two therapeutic concentrations tested. Based on a CC50 value—the concentration of drug at which 50 percent of cells maintain viability—Brilacidin was also shown to be non-cytotoxic in the lung cell line.

The new lung cell line data reinforce previous testing conducted at the RBL, in VERO cells, where Brilacidin showed a similar robust inhibition, of 75 percent, against SARS-CoV-2 compared to control. Brilacidin has also been shown, in testing at the RBL, to be non-cytotoxic in VERO cells.

Additional details on the Brilacidin anti-SARS-CoV-2 testing being conducted at the RBL are planned to be submitted for publication upon completion.

“Brilacidin has now demonstrated potent inhibition of SARS-CoV-2 in human lung and kidney cell lines, and in VERO cells, in laboratory testing conducted by independent academic researchers at two institutions, both of whom plan to submit their findings for peer-review publication,” said Leo Ehrlich, Chief Executive Officer at Innovation Pharmaceuticals. “The antiviral data we are compiling provides compelling proof of Brilacidin’s impressive ability to inhibit the novel coronavirus, toward initiating a clinical study of Brilacidin for COVID-19.”

Testing results observed to date formed the basis for a federal grant application that was submitted last week by the RBL, in collaboration with the Company, proposing to evaluate Brilacidin’s potential as a pan-coronavirus therapeutic, with possible extension into other viruses. The Company is in the process of manufacturing Brilacidin for intravenous (IV) dosing and will be seeking FDA guidance for a planned COVID-19 clinical study.

For researchers and institutions interested in collaborating on Brilacidin for COVID-19, please send inquiries to: [e-mail]

Brilacidin and COVID-19

Brilacidin is one of the few drugs targeting COVID-19 that has been tested in human trials (a total of 8) for other clinical indications, providing an established safety and efficacy database on over 460 subjects, thereby potentially enabling it to rapidly help address the novel coronavirus crisis. Ongoing laboratory testing conducted at a U.S. Regional Biocontainment Laboratory (RBL), and at a Public Health Research Institute (PHRI), supports Brilacidin’s antiviral ability to safely inhibit SARS-CoV-2 in both human and animal cell lines. A molecular screening study of 11,552 compounds also supports Brilacidin as a promising novel coronavirus treatment. Additional pre-clinical and clinical data support Brilacidin’s potential to inhibit IL-6, IL-1ß, TNF-a and other pro-inflammatory cytokines and chemokines, which have been identified as central drivers in the worsening prognoses of hospitalized COVID-19 patients. Brilacidin’s robust antimicrobial properties might also help to fight secondary bacterial infections, which can co-present in up to 20 percent of COVID-19 patients. These data collectively support Brilacidin as a unique 3 in 1 combination—antiviral, immuno/anti-inflammatory, and antimicrobial—anti-COVID-19 therapeutic candidate.

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About Innovation Pharmaceuticals

Innovation Pharmaceuticals Inc. (IPIX) is a clinical stage biopharmaceutical company developing a world-class portfolio of innovative therapies addressing multiple areas of unmet medical need, including inflammatory diseases, cancer, infectious disease, and dermatologic diseases. Brilacidin, a versatile compound with broad therapeutic potential, is in a new chemical class called defensin-mimetics. A Phase 2 trial of Brilacidin as an oral rinse for the prevention of Severe Oral Mucositis (SOM) in patients with Head and Neck Cancer, met its primary and secondary endpoints, including reducing the incidence of SOM. The Company plans to advance Brilacidin oral rinse into Phase 3 development, subject to available financial resources. Positive results were also observed in a Phase 2 Proof-of-Concept trial treating patients locally with Brilacidin for Ulcerative Proctitis/Ulcerative Proctosigmoiditis (UP/UPS). Brilacidin for UP/UPS was licensed to Alfasigma S.p.A. in July 2019. A Phase 2b trial of Brilacidin showed a single intravenous dose of the drug delivered comparable outcomes to a seven-day dosing regimen of the FDA-approved blockbuster daptomycin in treating Acute Bacterial Skin and Skin Structure Infection. Kevetrin is a novel anti-cancer drug shown to modulate p53, often referred to as the “Guardian Angel Gene” due to its crucial role in controlling cell mutations and has successfully completed a Phase 2 trial in Ovarian Cancer. More information is available on the Company website at www.IPharmInc.com.

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Innovative Industrial Properties - >>> 3 Recession-Proof Stocks to Buy Now

These companies will likely prosper in almost any economic environment.


Motley Fool

Will Healy

Jun 7, 2020


https://www.fool.com/investing/2020/06/07/3-recession-proof-stocks-to-buy-now.aspx


The COVID-19 pandemic stoked deep fears about how the economy would cope with the shutdowns required to get the disease under control. Consequently, stocks sold off in February and March as job losses and closures escalated.

However, investors often forget that some companies can prosper, even in harsh conditions, and may actually perform better when a recession occurs.

For those who don't forget, the recent crisis may a reason to reassess their stock portfolio and add some companies that can generate positive returns regardless of the state of the broader economy. Companies like Dollar Tree (NASDAQ:DLTR), Innovative Industrial Properties (NYSE:IIPR), and Verizon (NYSE:VZ) appear to match that description.

1. Dollar Tree

The Dollar Tree empire is made up of two extreme discounters. The company originally established the Dollar Tree line of stores, which sells most of its items at the $1 price point and the rest under $1. It later acquired Family Dollar. While Family Dollar stores also sells $1 and under items, they don't operate under the price limit of its sister brand.

Dollar Tree stock took a hit when it acquired Family Dollar in 2015. A failure to integrate the new brand into the broader company led to stock volatility, forced Family Dollar conversions to Dollar Tree stores, and occasional outright closures. This placed its most direct competitor, Dollar General (NYSE:DG), in a more favorable light as an alternative investment.

But with the COVID-19 crisis and the recessionary indicators that came with it Family Dollar stores ended up getting a performance boost. Many of the millions of newly unemployed were looking for ways to save money in trying times and were drawn to stores like Family Dollar. Dollar Tree stores also partially benefited, but supply chain issues with China, as well as a lack of Easter holiday sales due to the coronavirus outbreak, created lower sales overall.

Still, with supply chains realigning and millions still unemployed, shoppers will likely continue to frequent both stores.

Dollar Tree stock declined in February along with the broader market. But surging revenue from Family Dollar (which, along with Dollar Tree, were deemed essential businesses and remained open) has helped the company's stock recover its value and it is trading up for 2020. Dollar Tree stock trades at about 20 times forward earnings, which suggests the stock is trading at a premium. But analysts expect average annual profit increases of approximately 7% per year over the next five years.

Dollar Tree may continue to face challenges with Chinese suppliers and integrating Family Dollar into the fold. But with recessionary unemployment rates likely to persist for the foreseeable future, the company's brands should continue to be popular with consumers and with investors.

2. Innovative Industrial Properties

Innovative Industrial Properties allows investors in the marijuana industry to benefit in two ways. First, marijuana companies are a trending investment sector at the moment and are considered one of the few recession-proof sectors of the market. Second, while marijuana growers are still considered risky investments, a real estate investment trust (REIT) which rents property to cannabis growers has some insulation from the risks inherent in the industry. Being a REIT also somewhat shields the company from the excessive regulations associated with marijuana growers and allows Innovative Industrial to earn a profit and pay a dividend while many grower stocks are losing money and not rewarding shareholders.

Over the last year, Innovative Industrial has benefited from two key trends. One trend involves small start-ups selling their production properties to generate ready cash flow needed to operate and then leasing the property back immediately from the company they sold it to (in this case, Innovative Industries). The second trend is a change in legislation. Where previous laws limited the Innovative Industries' reach to states that had legalized medical or recreational cannabis, now federal hemp production legalization means the company can operate properties in all 50 states.

Because the potential is still not being realized for this industry, this stock trades at a forward P/E of 23.4, meaning it seels at a premium. But this appears reasonable considering that analysts predict earnings increases of 78.8% this year and 37.2% in fiscal 2021.

As a REIT, Innovative Industrial Properties must pay out at least 90% of net income to its shareholders. The company has not disappointed in that regard and its $4 per-share dividend payout yields about 4.6%. This dividend has also increased every year since Innovative Industrial paid its first dividend in 2017.

Grandview Research forecasts a compound annual growth rate for the global cannabis industry of 18.1% through 2027. This should ensure that the company will continue to attract tenants.

As hemp grows more popular and as more jurisdictions loosen restrictions on marijuana use, demand for properties like the type owned by Innovative Industrial should continue to surge.


3. Verizon

Verizon has struggled somewhat recently as declining margins in its wireless business and massive investments in 5G infrastructure weighed on the company. Last year alone, Verizon spent $17.9 billion on capital expenditures. This has contributed to the company's $106.56 billion long-term debt load. It also represents a significant burden for a company worth $61.65 billion after subtracting liabilities from assets.

Still, it does not have the much higher debt load and side business distractions of archrival AT&T (NYSE:T). Moreover, consumers need communication and internet connectivity in good times and bad. Even if the economy continues to struggle, the march to 5G will probably continue and the need for smartphones and internet connectivity will be there.

And Verizon has an investing advantage over its other big rival, T-Mobile (NASDAQ:TMUS), as Verizon's shareholders receive a dividend. Verizon paid out $2.46 per share last year and its payout yields about 4.3%. This payout has risen every year for more than a decade. The dividend claims about 51.7% of company profits, leaving plenty of free cash flow left over for infrastructure spending, debt paydown, dividend increases, and other investments.

This has left Verizon the growth-and-income play of the wireless industry. Verizon has risen by about 121% over the last 10 years. While that does not beat T-Mobile, it comes out well ahead of AT&T, which (with its dividend yield of about 6.6%) is primarily an income play.

In addition to a generous payout, the company sells for just 11.9 times forward earnings. Admittedly, some may sour on Verizon as analysts see profit growth averaging 1.9% per year over the next five years. Still, with 5G adoption expected to grow for years to come, Verizon should keep producing growth and income regardless of the broader economy's performance.

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>>> Reed's, Inc. (REED) develops, manufactures, and sells natural hand-crafted beverages in the craft specialty foods industry in the United States, Canada, Asia, Europe, Australia, and South America. Its products include Reed's craft ginger beers; Virgil's craft sodas; and Virgil's zero sugar sodas. Reed's, Inc. sells its products to natural food and gourmet retailers, grocery store chains, mass merchants, club stores, convenience and drug stores, liquor stores, industrial cafeterias, and on-premise bars and restaurants through distributors and independent distributor partners, as well as directly. The company was formerly known as Original Beverage Corporation and changed its name to Reed's, Inc. in 2001. Reed's, Inc. was founded in 1987 and is headquartered in Norwalk, Connecticut.

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>>>Axsome Therapeutics, Inc. (AXSM), a clinical stage biopharmaceutical company, engages in developing novel therapies for central nervous system (CNS) disorders in the United States. Its product pipeline includes AXS-05, which is in the phase III clinical trial for the treatment resistant depression and depressive disorders; and phase II/III clinical trials in agitation associated with Alzheimer's disease, as well as completed phase II clinical trial for the treatment of smoking cessation. The company is also developing AXS-07, which is in phase III clinical trial for the treatment of migraine; AXS-09 that has completed phase II clinical trial for the treatment of various CNS disorders; AXS-12, which has completed phase II clinical trial for the treatment of in narcolepsy; and AXS-14, an investigational medicine that is in phase III for the treatment of fibromyalgia. Axsome Therapeutics, Inc. has a research collaboration agreement with Duke University for evaluating AXS-05 in smoking cessation. The company was founded in 2012 and is based in New York, New York.

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>>> McEwen Mining Inc. (MUX) engages in the exploration, development, production, and sale of gold and silver. It also explores for copper deposits. The company owns 100% interests in the El Gallo and Fenix projects located in Mexico; and the Black Fox Mine and Stock Mill, Grey Fox, and Froome and Tamarack properties in Canada. It also owns interests in the Fuller, Davidson-Tisdale, Buffalo Ankerite, and Paymaster exploration properties located in Canada; and a 49% interest in the San José mine located in Argentina. In addition, the company owns 100% interests in the Gold Bar and Tonkin properties located in Eureka County, Nevada; and interests in the Los Azules copper project located in the cordilleran region in the province of San Juan, Argentina. The company was formerly known as US Gold Corporation and changed its name to McEwen Mining Inc. in January 2012. McEwen Mining Inc. was founded in 1979 and is headquartered in Toronto, Canada. <<<

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>>> CytoDyn Inc.(CYDY), a late-stage biotechnology company, focuses on the clinical development and commercialization of humanized monoclonal antibodies to treat human immunodeficiency virus (HIV) infection. Its lead product is PRO 140, a therapeutic anti-viral agent, which is in Phase IIb extension study for HIV as monotherapy, rollover study for HIV as a combination therapy, Phase IIb/III investigative trial for HIV, Phase Ib/II trial for triple-negative breast cancer, and Phase II trial for graft-versus-host disease. CytoDyn Inc. has strategic agreement with Samsung BioLogics Co. Ltd. for the clinical and commercial manufacturing of leronlimab. The company was formerly known as RexRay Corporation. CytoDyn Inc. was incorporated in 2002 and is based in Vancouver, Washington. <<<

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>>> Innovation Pharmaceuticals Inc. (IPIX), a clinical stage biopharmaceutical company, develops small molecule therapies to treat inflammatory diseases, cancer, dermatology, and anti- infective. Its's lead drug compound is Brilacidin, which is in Phase III study for the treatment of oral mucositis, inflammatory bowel disease, and acute bacterial skin and skin structure infection. The company also develops Kevetrin, a lead anti-cancer compound for treating ovarian cancer. In addition, it owns other compounds for treating diseases, including autism, arthritis, asthma, MS/ALS/Parkinson's, cancer, hypertensive emergency, and bacterial and fungal infections. The company was formerly known as Cellceutix Corporation and changed its name to Innovation Pharmaceuticals Inc. in June 2017. Innovation Pharmaceuticals Inc. was incorporated in 2005 and is headquartered in Beverly, Massachusetts. <<<

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>>> Else Nutrition Holdings Inc. (BABYF) focuses on the research, development, manufacturing, marketing, sale, and/or license of food and nutrition products to the infant, toddler, children, and adult markets. The company offers baby snacks products; baby feeding accessories, such as feeding bottles and disposable sterile nipples (teats); baby formulas; and toddlers/kids nutritional drinks. The company offers its products under the HEART brand. The company is headquartered in Vancouver, Canada. <<<

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>>> Innovative Industrial Properties, Inc. (IIPR) is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. <<<

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>>> EnWave Corporation (NWVCF) licenses, builds, and installs commercial-scale dehydration platforms for applications in the food, pharmaceutical, and industrial sectors to manufacturing companies in Canada. The company offers radiant energy vacuum (REV) dehydration platforms for food industry, such as nutraREV and quantaREV to dehydrate fruits and vegetables, cheese products, yogurt products, meat products, and snacks. It also provides REV platforms for pharmaceutical industry, including powderREV for the bulk dehydration of temperature-sensitive biomaterials, such as probiotics and enzymes; and freezeREV for the dehydration of biomaterial and pharmaceutical products. The company has a research and development license agreement with the College of Agriculture and Life Sciences at Cornell University. EnWave Corporation is headquartered in Delta, Canada. <<<