Fun day in the markets today, so naturally I had to get out a general discussion piece! Today I’m going to be talking about:
- Knightscope’s first day on the NASDAQ
- ALPP – A note on institutional buys
- ALPP – Recent interview
- A note on my disclosures
Knightscope (“KSCP”) – First Day on the NASDAQ
I know a lot of the AITX community was curious how KSCP would do on the NASDAQ, most did not have high hopes…
I try to keep my blog generally positive and not turn this place into a bashing machine. I try to talk about companies I like. KSCP, on the other hand, is NOT a company I am confident in. Actually, my first two articles I ever wrote (I apologize for them being even more amateur-ish!) were about why I don’t like KSCP. I won’t get into it too much, but you can find the articles here and here.
Long and short, and I hate to wag my finger and say I told you so, but I have no idea what people were thinking investing at KSCP at those prices. I said months ago KSCP was not a fundamentally sound company. Sure enough, KSCP got absolutely pummeled today, down 40% last I checked. They even triggered circuit breakers on day one which is never a good sign.
Why don’t I like KSCP?
I’d recommend reading the articles I wrote, but three things stick out:
One, the company has shown they are not capable of growth, even with exponentially more capital to work with than AITX. Their revenue has stagnated for the last several years while touting themselves as a technology unicorn capable of exponential growth. Something is not adding up, and it seems like their products are ineffective or just not ready for the market.
Two, the company has some serious cost structure issues. This is gone into in extreme detail in my articles, so I’d suggest you read those. But they are absolutely burning money, can’t turn a gross profit, and all of this investment in people is barely bringing growth to the business.
Three, the company is weirdly obsessed with marketing their IPO. I can’t imagine how much money they spent marketing this thing, but it must have cost them a pretty penny. You should always be worried when a company is spending heavily on finding people to just invest in the company. Shouldn’t they, you know, spend money on developing their products and/or marketing their products to customers?
You want a company privately “road showing” their company to institutional investors, not spamming Twitter ads trying to find people to crowdfund their company. My philosophy is this: you advertise to investors privately, and you advertise your products publicly. Once you start spending millions of seed money just trying to find more investors, you’ve got some serious issues. I think there’s a word for companies like that… but I won’t say it 😊.
Anyways, turns out I was right about KSCP so far. I hope for their investors’ sake they can turn it around, but only time will tell.
ALPP – A Note on Institutional Buys
I’ve gotten some questions on this directly from some ALPP investors, so I wanted to discuss it quickly here. There’s been some posts going around talking about some institutional buyers investing in ALPP. I recommend you check out this tweet here for more detail.
While the institutional buys are good, I think a lot of them should be taken with a grain of salt, especially the buys from Vanguard which is a big chunk of it. The Vanguard buys are for ETFs and mutual funds that are just tracking the greater US stock market. These funds have market weighted allocations and are only allowed to invest in companies traded on the NYSE and NASDAQ.
As ALPP is on the NASDAQ, these funds have to invest a small fraction of their total holdings into ALPP in order to follow their prospectus.
It’s cool and all that these institutions are buying up ALPP shares, and it’s definitely not a BAD thing for the company. It’s actually a very nice thing having the backstop of institutions buying up shares. But a lot of it is really just due to the company trading on the NASDAQ.
So I wouldn’t necessarily say Vanguard is signaling that ALPP is the next Tesla. It’s just that they have to buy shares due to fund prospectuses.
I write this just to have everyone manage their expectations. Don’t get me wrong, it’s good for the company and one of the bonuses of being NASDAQ listed. But it’s not some insider secret signal that ALPP is going to the moon.
ALPP – Recent Interview
For those of you that haven’t seen it, I highly recommend hearing the CEO of ALPP speak at a conference in Miami. You can find a link here.
He touches on the RCA Batteries joint venture, which was the topic of my article yesterday. But he also gets into a lot more detail on their vision for their batteries business and how they are trying to disrupt and revolutionize the industry. I got very excited hearing him speak about that.
Also, another favorite topic of mine is he gets into the drone business. I’ve also written about Vayu in past, but it’s really cool hearing the CEO talk drones given it’s a big Driver business for ALPP and people are expecting big things. Based on the talk, it seems like everything is pressing along there very well!
A Note on my Disclosures
Apparently, this was going around on StockMorons today, and some people have asked about it before, so I’ll quickly address it here. I do not get paid by anyone at ALPP, AITX, etc. in return for favorable article opinions, pumping up the stock, whatever. My following is also not that large, so I have no idea why people would think I’m capable of that.
My disclosure is there because of my Patreon. It doesn’t provide any benefits to Patrons other than it being a donation to help run the blog and cover expenses. If someone from AITX, ALPP, etc. is a Patron, they aren’t getting anything in return. I always reserve the right to be critical of ALPP and AITX, and I have in the past.
I always want to over disclose to my readers, sometimes people take it the wrong way, but it’s better than me being un-transparent 😊.
Aaand that’s all for today folks! Remember to subscribe to the email list on the sidebar if you like my content and want to get notifications when new articles are posted. Also, consider becoming a Patron if you enjoy my content and want to help keep the blog running.
DISCLAIMER – AT THE TIME OF WRITING THIS ARTICLE I HAVE A LONG POSITION IN AITX and ALPP. THIS ARTICLE IS NOT FINANCIAL ADVICE AND IS INTENDED ONLY FOR EDUCATIONAL PURPOSES. I AM NOT A FINANCIAL ADVISOR. AT THE TIME OF WRITING THIS ARTICLE, PERSONS AFFILIATED WITH THE COMPANY ANALYZED ABOVE MAY BE PROVIDING MONETARY COMPENSATION AS MONTHLY PATRONS THROUGH MY PATREON. THIS COMPENSATION IS NOT PROVIDED IN RETURN FOR ANY SERVICE, WRITING ABOUT A PARTICULAR TOPIC, AND/OR FAVORABLE OR UNFAVORABLE OPINIONS. MY PATREON SUPPORTERS HAVE NO INFLUENCE ON THE CONTENT OF MY ARTICLES.
1 thought on “General Discussion – 27 January 2022”
Good insight concerning Knightscope.