Tremendous

An angel investor's take on life and business

  • Why NFT’s Aren’t BS

    On November 15, 2017, the painting Salvator Mundi by Leonardo da Vinci sold for a $450,312,500, the highest price ever paid for a painting. It is currently believed to be aboard a yacht in the Red Sea owned by Saudi Crown Prince Mohammed bin Salman.

    We are used to sky high prices for physical pieces of art. But until recently, digital art had almost no value. It could be reproduced infinitely, so how could anyone sell or own it?

    Enter Non-Fungible Tokens (NFT’s). These tokens are pieces of art, videos, etc. that have a unique digital key. Their one and only owner is recorded on the blockchain, just like the ownership of cryptocurrencies like bitcoin.

    The NFT market is exploding (see the March 8th post here):

    The 10 largest NFTs have leapt by between 60% and 900% so far this year, according to crypto data provider Messari. In turn, sales of the tokens footed to more than $60 million in February per Bloomberg, up from $250,000 a year ago.

    Beeple, a major digital artist, has done very well in the NFT market:

    Beeple, who made his first foray into NFT’s in October, generated $3.5 million in proceeds from a 20-work digital art collection two months later.

    NPR just put out an interesting, brief interview with Beeple here.

    Monetizing digital art is no less legitimate than monetizing physical art, in my view. Why should art made of pixels be worth nothing while art made of paint and canvas be worth hundreds of millions? The medium doesn’t make something art or not art.

    The global art market clocks in at $67 billion in sales, while the NFT market is only worth about $250 million. I expect to see that figure expand exponentially in the future, especially with the entry of blue chip art names like Christie’s.

    Does that mean there is no NFT bubble? No. Some tokens may be overvalued and some people are probably speculating on quick price increases. But my view is that this market is legitimate and here to stay.

    For more on the blockchain and cryptocurrencies, check out these posts:

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    Photo: “Mike Winkelmann – Beeple at Expanded Animation – OUT OF THE BOX, POSTCITY” by Ars Electronica is licensed under CC BY-NC-ND 2.0

  • New Stimulus Checks Could Set GameStop Off Like Never Before

    With the House about to approve another $1.9 trillion in stimulus, the final hurdle before the legislation is signed by President Biden, I found myself wondering what this means for shares in GameStop and other meme stocks.

    Those stocks took off big time in January, as personal income increased 10% month over month. Most Americans received a $600 stimulus check in December of 2020. A couple weeks later, shares in GameStop, AMC and others took off.

    That stimulus is dwarfed by the new one, which will mean $1,400 checks for most Americans along with expanded unemployment, child tax credits, and other benefits. If a $600 check set meme stocks on a tear, what will $1,400 do?

    Indeed, the expectation of stimulus payments may already be boosting GameStop shares, and may continue to do so in the future:

    Market strategists have said tens of billions of dollars of U.S. President Joe Biden’s coronavirus relief package could indirectly find their way into shares, possibly boosting “meme stocks” that are heavily promoted by retail traders in online social media forums such as Reddit’s popular WallStreetBets.

    My view of this company is that it’s lacking in fundamental value and should be avoided. However, it definitely wouldn’t surprise me if the stimulus gave the shares a short-term pop. The question is, how long will it last? You don’t want to be left without a chair when the music stops.

    For more on GameStop and other meme stocks, check out these posts:

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    Photo: “Money!” by ToGa Wanderings is licensed under CC BY 2.0

  • Will A Massive Uprising in North Korea Mean the End of Kim Jong-un?

    North Korean defector and Youtuber Yeonmi Park is reporting a massive uprising in Musan, North Korea. The uprising began when police cracked down on a market selling Chinese products, which is illegal in North Korea despite them being the only goods available.

    Farmers took their farm implements and attacked the police. The backdrop for this is an increasingly hungry population with little to lose. Indeed, the situation is so dire that even Russian diplomats are fleeing the country by railroad handcart, appalled at the lack of basic food and goods.

    I haven’t been able to find independent corroboration of this uprising, and Park is unclear on what her sources are, but I assume she is still in contact with people inside North Korea.

    Her discussion of the uprising begins here.

    For more on breaking news, check out these posts:

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    Photo: “Kim Jong-un visiting Berlin.” by driver Photographer is licensed under CC BY-SA 2.0

  • Has Merck Found the Cure for COVID?

    Merck has come out with great results from a new drug for COVID:

    Over the weekend, the Big Pharma and its biotech partner Ridgeback announced their drug, molnupiravir, hit one of its secondary objectives from a new trial, namely to reduce time to negativity of infectious SARS-CoV-2 virus isolation from swabs in patients with symptomatic COVID-19.

    The data show that, at Day 5, there was a reduction in positive viral culture in subjects who received molnupiravir (all doses) compared to placebo: 0% (0/47) for molnupiravir and 24% (6/25) for placebo.

    These findings are preliminary, and more data will come out soon:

    This is just a peek, with primary endpoints and more secondaries “to be presented at an upcoming medical meeting,” which will show a much clearer picture of how well this drug may be working.

    We should know a lot more within the next few weeks:

    Data from the phase 2/3 pivotal studies of the med are expected this quarter.

    This drug could be great for people who are hesitant to get a vaccine, who haven’t been able to get one yet, or for whom the vaccine did not prevent infection (rare but possible). Good news!

    For more on COVID drugs and vaccines, check out these posts:

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    Photo: Merck CEO Kenneth Frazier, “File:Kenneth C. Frazier.jpg” by Merck (www. Merck.com) is licensed under CC BY-SA 3.0

  • Why Someone Dying After Getting Vaccinated Doesn’t Mean Anything

    We keep hearing scary stories about people getting sick or dying shortly after getting a COVID vaccine. But we shouldn’t confuse correlation with causation. From the mathematician Gary Cornell’s excellent blog:

    For example, within one week after vaccinating 10,000,000 people, you will likely have around 98 people keel over and die for no apparent reason and if all of them were pregnant women, almost 27,800 miscarriages.

    In this post, he has a table with the expected rate of many diseases we often hear are associated with vaccines, such as Guillain-Barre syndrome. It turns out, a substantial number of people are going to get those illnesses anyway, with or without a vaccine.

    My wife made an excellent analogy on this subject recently. “Someone might have drank tea and had a stroke in the same day. But it probably wasn’t the tea.”

    Same idea here. And with the US having given out over 90 million shots, mostly to the elderly and frail, the fact is some people are going to die shortly thereafter. But it doesn’t say anything about the vaccine.

    The clinical trials carefully compared the vaccinated and unvaccinated groups in the trial and found no higher rate of complications amongst the vaccinated. And that’s the data to act on.

    Photo: Me getting the Moderna vaccine on February 22. I am alive and well as of this writing.

    For more on COVID and vaccines, check out these posts:

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  • GameStop May Go Broke Before It Can Reinvent Itself

    GameStop shares are surging again today, even as the company is losing hundreds of millions of dollars a year.

    The stock is reacting to Chewy founder Ryan Cohen beginning a push to transform GameStop into an e-commerce business. But it still has 5,000 stores that were losing a fortune even before COVID. And they won’t be easy to get rid of.

    Commercial leases typically last for several years, unlike residential ones. But what exact terms is GameStop bound by? This morning, I made it my mission to find out.

    The most recent info I could find was from their 2018 annual report:

    Store leases typically provide for a lease term of one to five years, plus renewal options

    That means this store-centric business model that is losing a fortune is locked in for years. Whatever Mr. Cohen does, it won’t take effect for quite some time, and the company could be out of cash by the time it happens.

    GameStop lost $300 million in the first 9 months of 2020 and had only $600 million in cash left. They could be out of money 18 months hence at that rate, or about 1 year from now. That’s long before these money-losing leases expire and free them to pursue a better business model.

    Their best course of action is to take advantage of their high-flying stock and issue a lot more shares. That war chest should be used to wind down all physical stores and completely focus on their e-commerce business, which is actually growing very quickly.

    Such a plan would dilute existing shareholders significantly though, so for current GameStop shareholders, it’s hard to see a happy ending to this story.

    For more on GameStop, check out these posts:

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    Photo: “GameStop” by JeepersMedia is licensed under CC BY 2.0

  • Elon Musk’s Secret Battery May Be the World’s Largest

    Elon Musk’s Tesla, Inc. has connected a massive battery to the Texas power grid:

    A Tesla subsidiary registered as Gambit Energy Storage LLC is quietly building a more than 100 megawatt energy storage project in Angleton, Texas, a town roughly 40 miles south of Houston. A battery that size could power about 20,000 homes on a hot summer day.

    This megabattery may be the world’s largest, surpassing another Tesla project in Australia:

    Tesla’s battery project in South Australia, launched in 2017, is adjacent to a wind farm and can store surplus electricity generated on gusty nights for daytime demand. At 100 megawatts, it was the largest battery project in the world at its launch.

    Battery packs like these could make it easier to store renewable energy when the sun is shining and the wind is blowing. And the energy market is so big, a major push in this area could help justify Tesla’s lofty valuation. From the Bloomberg report:

    “I think long-term Tesla Energy will be roughly the same size as Tesla Automotive,” Musk said during an earnings call in July 2020. “The energy business is collectively bigger than the automotive business.”

    Battery prices are falling precipitously, making such a future increasingly plausible. Prices have fallen from $668/kWh in 2013 to $137 last year, a decrease of nearly 80%.

    For more on Tesla, electric vehicles, and financial markets, check out these posts:

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    Photo: “Elon Musk” by dmoberhaus is licensed under CC BY 2.0

  • GameStop Is Surging, But Are They Willing To Make Hard Changes?

    GameStop Corp. shares are surging today and are currently up over 30%:

    Chewy co-founder and GameStop board member Ryan Cohen is taking a bigger role, which is driving today’s gains:

    GameStop Corp. shares extended their rally after the company tapped Chewy.com founder Ryan Cohen to guide its transition to an e-commerce business.

    Cohen, a director at the video-game retailer, will chair a new board committee tasked with the transformation, the company said in a statement Monday, confirming an earlier report by Bloomberg News.

    But GameStop is still losing hundreds of millions of dollars a year, continuing a trend that predates COVID. It has 5,000 stores that are dinosaurs in an e-commerce driven world. Formation of a committee is nice and all, but this doesn’t mean any real change right now. And certainly not enough to make a money losing, moribund company worth 30% more than it was yesterday.

    Even if they decided to close all their stores tomorrow, they’d still be on the hook for years’ worth of rent. A typical commercial lease lasts 3-5 years, locking in this cash-incinerating business model for quite some time.

    For more on GameStop, check out these posts:

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    Photo: “GameStop” by JeepersMedia is licensed under CC BY 2.0

  • You May Soon Be Able to Get Vaccinated in Russia

    As some US states lag in COVID vaccinations and the EU barely vaccinates at all, some are looking to Russia for help:

    Lufthansa is reportedly discussing the “medical tourism” jet scheme with bosses at Moscow’s Domodedovo airport.

    The German airline is also in talks with the Russian foreign ministry about a regular service to the airport, it was reported.

    Passengers would fly in and out without necessarily needing a visa or entering the country to see the sights such as Red Square and St Basil’s Cathedral.

    They would then make a second trip three weeks later to be fully protected by the Russian vaccine.

    Two return flights from Frankfurt are estimated to cost around £1,750.

    This hasn’t happened yet but it’s something to watch closely, especially if you’re in the EU or other countries that have barely begun to vaccinate. Russia’s vaccine is highly effective, per a study published in The Lancet:

    Vaccine efficacy, based on the numbers of confirmed COVID-19 cases from 21 days after the first dose of vaccine, is reported as 91·6% (95% CI 85·6–95·2)

    Russians have proved hesitant to get the vaccine, perhaps due to mistrust of their government, so this may mean more available for foreigners.

    For more on COVID and vaccines, check out these posts:

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    Photo: “Putin Claims Moon” by AZRainman is licensed under CC BY 2.0

  • The UK Has Killed COVID, and the US Is Close Behind

    The UK has vaccinated faster than almost anywhere on earth:

    And it’s working! Cases have fallen off a cliff, dropping by almost 90% in just two months:

    The US is actually not far behind the UK in vaccinations per person anymore, although we were significantly behind until recently. And we are actually putting out more doses per capita than the UK at the moment. So, this gives us an idea of what we have to look forward to. If anything, our results should be even better because a more contagious variant is more widespread in the UK than here.

    Indeed, we’ve seen cases fall by 2/3rds over the same period:

    To me, this seems like an incredibly powerful endorsement of Brexit and the Johnson government, neither of which I ever thought I’d favor! But the rollout in the EU has been pathetic. Meanwhile, as an American, I’ve been looking upon the UK with envy.

    Bottom line: the vaccines really are working, and we have an amazing summer to look forward to!

    For more on COVID and vaccines, check out these posts:

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    “Boris Johnson” by EU2017EE is licensed under CC BY 2.0