| By Bill Bonner, Chairman, Bonner & Partners POITOU, FRANCE – Where’s the beef? Yesterday, Beyond Meat – a company that sells imitation meat products – got whacked with a 12% loss. That still left it nearly 10 times above its initial offer price. The remarkable thing about Beyond Meat is not the fake meat; health nuts, animal lovers, and Seventh-day Adventists have been eating mock meat for decades. The interesting thing is what the company reveals about the whole fandango. | Recommended Link | Wow, Did You See This Crazy $151,740 Opportunity Last Week? Last week, Jeff Brown revealed his secret system for uncovering huge (1,000%) opportunities tucked away in a small subsector of the tech market. He even wagered $2 million that you’ll have the chance to see $151,740 over the next year using just five minutes of your time each month. | | | -- | Profits to Strangers A few decades ago, we had the idea that maybe we would like to take our company public. So we called a friend – a partner at Alex Brown, Baltimore’s premier investment firm – to find out more. “Forget it,” was this old-timer’s advice. “In the first place, no reputable investment banker will take it on. You’re too small. And you’ve got to prove that you can grow and remain profitable. But if you can do that… Why go public? Why give the profits to strangers? You just give yourself extra headaches. “People only go public if they need the money… or they think the business has topped out. Then, they’re selling to the dumb money. I mean, think about it. Who’s going to sell his business now if he thinks it will be more valuable in the future? Only a fool or a charlatan.” We thought for a minute about which category we should aim for. But we soon rejected the whole idea. | Recommended Link | There May Not Be Enough Of These Metals On The Planet To Supply China’s Huge Battery Factory Get this: The Chinese government is banning all gas- and diesel-powered vehicles, and forcing battery production at a massive scale. They need all 244 million drivers to either stop driving – or use an electric car. And they need all of the 28 million yearly car sales to be electric. Barron’s goes on to say, “Given the slow time to market… sharp changes in demand can have a profound [impact] on prices…” And this demand surge is pretty much guaranteed by the Chinese government. In other words, China isn’t creating this many batteries because they are “hoping” electric cars take off… They have a much more powerful, lasting motive. The result could shoot this tiny $1 stock through the roof. For all the details on this opportunity… | | | -- | Job Well Done The traditional way to make a lot of money is to start a company, work for years to prove out your concept, and then take it public. You sweat to get through the “growth” stage of the business. Then, you get your reward and leave the public with the mature, less profitable, but more predictable, stage. Beyond Meat’s entrepreneurs could have spent the next 10 years mixing in a little more sunflower oil… squeezing out the last of the gluten… adding some soy extract. Eventually, they’d probably be able to produce a fair facsimile of a hamburger. Then, they could battle it out with other fake-meat producers for market share. If they were lucky, they might have gotten sales up to $200 million or $300 million, with profits of, say, $30 million a year. At least investors would know what they were getting. They could take the growth rate and the profit margins, extrapolate into the future, discount the expected profit stream, and come up with a reasonable idea of what the company was worth. On the numbers I gave here, we might expect Beyond Meat to go public for, say, 10 times earnings, giving it a market capitalization in the neighborhood of $300 million. Wouldn’t that be enough? “Job well done,” the investors might say. CEO Ethan Brown could feel like a success… instead of a shyster. But Brown and his team didn’t wait. With less than $10 million in sales… only 381 employees… and zero profits – ever – they offered the company to public investors. Did the investment pros turn them away… as Alex Brown turned us away 30 years ago? Nope… Did investors laugh and turn up their noses? How was the company ever going to be profitable? How was it going to compete with food-industry giants, such as Hormel and Tyson Foods? Everybody knew that Beyond Meat had no proprietary formula… no popular brand; there were no castles in this market and no moats to protect them. It didn’t seem to matter. The stock is still up 200% since the May IPO. | Recommended Link | If I were Elon Musk, I’d leave Tesla now $2.2 billion… That’s how much Tesla’s CEO, Elon Musk, made last year. It landed him as #1 on the New York Times list of top “overpaid” CEOs. But soon, his wealth… and his dream to fill America’s roads with electric cars… may all come crashing down. Not because the SEC will force him to step down as Tesla’s CEO… And not because Tesla’s stock will plummet even more after his recent analyst meeting went horrible yet again. But because of these three digits right here: | | | -- | Fools and Money These are strange times… with strange portents in the night sky. Nothing is quite what it appears to be. No ground is solid enough to stand on. No number can be trusted. And all the old, time-tested traditions – from balanced budgets, to IPOs, to honest prices – have been swept away by dishonest money. The purpose of real money is to coordinate, calibrate, and commemorate who owes what to whom. It is vital information for a modern, post-Paleolithic economy. Take it away and everything goes a little flooey. Traditionally, fools and their dumb money are soon parted. That imposes a limit on how many dumb deals the market can absorb; there’s only so much retarded cash available. But in May, when Beyond Meat went public, the Federal Reserve reversed its “tightening” policy, beginning a loosening cycle. Get in now, said the promoters, or risk missing out on one of the most major changes in consumer eating habits in 100 years! FOMO! (Fear of missing out.) This was “better than bitcoin,” said the hustlers. And so it was that the IPO came out… and instead of laughing, investors bid up the price to nine times the initial offer. The market cap rose over $14 billion. That made it bigger than 29% of the S&P 500. And made it worth more than Conagra Brands, a 100-year-old food giant. And now, CEO Brown and the other founders say they’re getting out when the getting’s good – as soon as they can. The CEO alone plans to sell some $8.7 million in stock. Conagra has everything that Beyond Meat lacks – employees (18,000 of them), brands (owns Duncan Hines, Birds Eye, Orville Redenbacher, Hunt’s, and Slim Jim), sales ($9.5 billion), and profits ($708 million). There’s the beef. A real business. With real sales and profits. But the weight of it only keeps Conagra’s feet on the ground. Conagra plods along while Beyond Meat soars. What to make of it? We don’t know. But it is fakeness that speculators want now. And for the moment, there seems to be no end to their dumb money… and no limit on how dumb it can get. Regards, Bill TECHNOLOGY INSIGHT: WOULD YOU ACCEPT A “DATA DIVIDEND”? By Jeff Brown, Chief Technology Analyst, Bonner & Partners Every time you log in to Facebook or search for something on Google, your data is being collected, some might say “stolen,” and used by these companies to target ads. Bill and my other colleague Dan Denning have both been following this trend in these pages. But what if I said you could get paid for your data? Last month, the U.S. Senate introduced a new bill called the DASHBOARD Act. It says that technology companies with more than 100 million monthly users must disclose the type of data they are collecting… and put a monetary value on that data every quarter. In other words, the bill says social media companies must tell users how much money their information is worth… how much value is being extracted from them. This act is specifically targeting companies like Facebook and Google. What’s particularly interesting is that this act, if signed into law, would give us a standard metric to measure the value of the data a consumer produces. And valuing data isn’t as hard as it seems. Social media companies already report their average revenue per user (ARPU) metrics. For example, we know Facebook made about $30 per U.S. user last quarter. That was its ARPU. But what that doesn’t tell us is how much our information is worth individually. If the average was $30, that means some people produced a lot more… and some a lot less. Once we know the value of our individual data, we’d have a baseline for what these firms would likely pay users in exchange for personal data. I’ve predicted this for a while. I believe the data-collecting companies will have to pay people for their data – we can think of this like a profit-sharing agreement between the tech platform and the producer (us consumers). This would deflect regulatory scrutiny and appease some lawmakers hoping to break these companies up. The web browser Brave is already sharing advertising revenue with users. The big boys like Google and Facebook will eventually have to do the same. Everybody will get “data dividends” each quarter, based on the value of the data they produced. It may be somewhat tongue in cheek, but it will be like a form of universal basic income (UBI)… because pretty much everyone has a smartphone and computer. I believe this is one of Facebook’s ultimate goals with its Libra cryptocurrency. Don’t be surprised if, one day soon, you log in to your Facebook account and see a “data dividend” in your digital wallet – payment for service rendered. – Jeff Brown P.S. For the last five years, I’ve been on something of a crusade… Silicon Valley venture capitalists have captured practically all of the best early stage tech investments. Regular investors have gotten the scraps. I’ve been looking for a way to turn the tables. And I’ve finally found it. It’s the best way I know how to make large, fast gains from early stage tech without being a VC. It’s my most ambitious project to date. And if you want all the details, you shouldn’t delay. At midnight ET, this page will be taken down. I can’t guarantee you will see it again after that. For the full story, go here before midnight ET. FEATURED READS How Will the Fed Defend Rate Cuts?
The Federal Reserve is likely to cut interest rates when it meets today. After all, it’s Inflate or Die. But the Fed will have to convince the public that the rate cuts are for the good of the economy… not just to appease the president. What Will Signal the Next Recession?
We’re in the longest period of economic expansion in American history. But it has to end eventually. And when it does, these indicators will be the first to alert us. The Real Reason the Feds Fear Cryptocurrencies
New digital currencies keep emerging. Resident tech expert Jeff Brown says that the global currency revolution is here. How will that affect investors – and are the U.S. government’s fears justified? MAILBAG Today, a dear reader identifies the source of a stench that another dear reader drew our attention to… Hi, Bill. With reference to Patrick V’s comment in last Thursday’s newsletter: “Have you ever noticed how Paris smells like urine and diesel?” There is a reason for this. Back in the day, every street in central Paris was equipped with “pissoirs,” also known as “vespasiennes.” These were typically cylindrical structures with an internal trough fastened to each’s wall. Men could enter these structures and urinate out of sight, apart from the bottoms of their legs. There were other designs, but this design was most common in Paris. For example, see this image: 
These structures lasted a long time, but were largely phased out in the 1960s. A few lasted through the 1970s, but they were gone by the early 1980s. Sadly, Paris men simply went back to doing what they did before pissoirs were installed, i.e., urinating wherever they felt like it. If anybody wants an insight into the social attitude toward pissoirs, I recommend reading Clochemerle by Gabriel Chevallier. It’s a story about the battle between the mayor of a provincial French village, who wants to install a pissoir as a memorial to his greatness, and the priest whose church he wants to install it next to. – Warwick G. While another dear reader knows part of the reason defense spending is sky-high… Your observations on sky-high defense spending don’t hit the whole problem. My company manufactures items with applications for both commercial and defense customers. And what we make is at the lower part of the cost range. An item we manufacture for commercial purposes has one cost figure. We make what the customer requires – form, fit, and function. Everybody is happy, and the price is x. The same type of product procured by a defense company doing business with the federal government requires a much higher level of quality control (QC): direct time, paperwork, recordkeeping, quality-process documentation, and conforming to a quality standard that requires lots of time each year to maintain. These firm requirements take a significantly greater amount of time and manpower to satisfy all of their specific conditions, so we have to charge more for a product that physically is very similar to a product we manufacture for commercial purposes. The price becomes x+++. The reason that hammer is several hundred dollars more than a Home Depot hammer is anything used in a defense application puts a burden on the supplier to conform to what the big defense companies require. Just check out how much it costs to become ISO 9000 certified for a small manufacturer on an annual basis. If you aren’t certified, they won’t do business with you. Not everything these defense behemoths purchase demands such a high level of QC (which adds to the cost considerably). But their purchasing departments have no ability to know what must have close scrutiny and QC vs. what could be handled like a commercial product. So if we want the business, we must conform to their requirements and charge a higher price. – Maryann H. IN CASE YOU MISSED IT… Last week, Silicon Valley insider Jeff Brown revealed his secret trading system… This system can uncover huge opportunities tucked away in a small subsector of the tech market. Jeff even wagered $2 million that you’ll have the chance to see gains like $151,740 over the next year… using just five minutes of your time each month. Don’t worry if you missed Jeff’s groundbreaking reveal… you can watch a replay right here. But don’t delay – this opportunity closes at midnight ET. 
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