Tomorrow’s tech breakthroughs will transform our world and our portfolios. But let’s not forget what will power that technology

 

On Monday — its third day as a publicly-traded company — an upstart automaker soared 104%.

At one point during the trading session, its market-cap was bigger than Ford’s.

Keep in mind, not only hasn’t this company generated a dime of profit yet, it hasn’t even generated a dime of revenue. Of course, management says this is just a matter of time. They allege that pre-orders for their vehicles have now topped $10 billion.

Yesterday, shares surged another 20% after the opening bell before reversing and erasing gains. The stock had to be temporarily paused due to volatility, but ended the day up about 9%. As I write Wednesday morning, it’s giving back most of yesterday’s gains.

What’s happening here?

We’re talking about upstart battery-electric and hydrogen-electric truck-maker, Nikola Corporation.

(The next electric automaker to come along is out of luck, since Nikola Tesla didn’t have a middle name.)

Nikola began trading last Thursday after a reverse merger with VectoIQ, which is a publicly-traded special purpose acquisition company.

The surge in price on Monday came after CEO Trevor Milton (who shares similarities to Elon Musk, by the way) tweeted that Nikola is now taking reservations for its electric truck, “Badger.”

 

 

Now, at first glance, this is a fascinating story about a next-generation electric truck, a daring entrepreneur, and overnight riches (Milton is allegedly worth about $9 billion today) …

But there’s a far bigger, far more powerful investment story brewing under the surface. One that will make 104% gains appear downright puny.

It’s something Matt McCall says “will go down as one of the greatest and most impactful inventions of the 21st century.”

We’re talking about next-generation batteries.

From Matt:

… there are huge investment implications here. Those on the right side of this innovation stand to build incredible wealth … just like people did from the creation of the internet and the smartphone.

Today, let’s dig into the details behind Nikola, batteries, and the breakthrough that’s coming, then we’ll pivot toward what it means for your portfolio.

***We first profiled Nikola and CEO Trevor Milton in the Digest back in November

 

While Nikola’s electric trucks were interesting, we focused on Milton’s eyebrow-raising claims about a battery breakthrough his company had allegedly made.

From Milton:

This is the biggest advancement we have seen in the battery world.

We are not talking about small improvements; we are talking about doubling your cell phone battery capacity. We are talking about doubling the range of BEVs and hydrogen-electric vehicles around the world.

Milton claimed that his company had developed a new type of battery cell that offers double the energy density of current lithium-ion batteries, yet comes at only 40% of the weight and half the cost.

For any readers who aren’t aware, lithium-ion batters are the current batteries used in Teslas and other consumer-market electric vehicles.

Now, how is it that this startup allegedly accomplished this quantum leap in battery technology while the rest of the industry has been making slower progress over the last few years?

From Milton:

They were looking in the wrong place, trying to make design improvements in what was already there. We started with a completely different approach to this, that gets all those metals out.

Milton’s claims were met with a great deal of skepticism by the broader industry. And, in fact, the battery-electric version of the Badger has a range of just 300 miles. For context, Tesla’s long-range Model S offers an alleged range of 370 miles, and Tesla claims its tri-motor Cybertruck will go over 500 miles without seeing a charger.

However, if you upgrade to Badger’s fuel cell battery which also uses hydrogen, Nikola claims the truck’s range will be 600 miles.

We’ll find out the reality soon enough. But any way you cut it, a battery breakthrough is coming, and it’s going to be a gamechanger.

From Matt:

We can now see the revolutionary new battery technology that will have multi-trillion-dollar economic implications.

Think of a world with electric cars that have massive ranges and are full of sensors and cameras to drive themselves. Think of a smartphone that needs charging just once per month. Think of mass adoption of clean solar and wind energy. And on and on …

This isn’t a matter of “if,” it’s a matter of “when.” And it’s easy to see how the next battery breakthrough will go down as one of the greatest and most impactful inventions of the 21st century.

***The power of finding a game-changing trend

 

For any newer Digest readers, Matt is our resident thematic investment expert. This means he finds the massive trends that are reshaping our world, and by extension, our investment markets. He then identifies the specific stocks best positioned to ride those trends higher.

In recent days, we’ve highlighted a massive technology trend that’s going to transform our everyday lives this decade — 5G.

This high-speed connectivity will power everything from smart cities, to driverless cars, to augmented reality glasses, and far more. In short, 5G technology is going to unleash a new era of prosperity and trigger a massive wave of innovation.

But what’s going to power 5G?

It’s the battery breakthrough that’s coming — solid state.

Matt writes that solid state batteries use solid electrolytes instead of liquid electrolytes. This change from liquid to solid is a major leap forward in virtually every aspect of battery technology. Solid state batteries will be smaller and lighter … have higher capacity at lower cost … be better for the environment … and be much less likely to overheat, catch fire, or explode.

Simply put, they’ll be superior in every way to today’s batteries.

Now, as we turn to the investment implications of next-gen batteries, here’s Matt to set the stage:

Future technological innovations require better batteries, and the unbelievable number of batteries that will be needed in the years ahead make this a true hypergrowth trend.

It’s still early, so the moneymaking potential is massive.

***”Massive” might be an understatement

 

The need for next-generation batteries ties into an investment concept popularized by legendary investor Warren Buffett called “inevitables.”

Buffett coined the term in reference to specific, time-tested companies, like Coca-Cola and Gillette, that have enduring advantages over competition.

Yet, “inevitable” can also apply to an investment trend.

For example, in past Digests, we’ve referenced the rise of cybersecurity as an “inevitable” industry, since cybercrime is exploding around the globe, and will continue to do so. It is “inevitable” that the cybersecurity industry will thrive given the reality of our world.

Tomorrow’s batteries are equally “inevitable” — after all, there are no wondrous 5G technologies without batteries.

Now factor in the added benefit of investing in batteries — the “picks and shovels” benefit.

If you’re unfamiliar with the term, it dates back to the 1849 Gold Rush.

Though thousands of would-be millionaires set out to find gold, most never saw a single penny from their sweat and toil.

But who did generate a fortune — the easy way? The entrepreneurs who supplied all the picks and shovels to the dreamers looking for riches.

We don’t know which 5G products and services will become the next “must have” product of the future. What we do know is they’ll be powered by a next-gen battery.

It’s inevitable.

So, while you can “prospect for gold” with other investments in your portfolio, why not allocate some money toward the higher-probability picks-and-shovels play too?

***As Matt noted, we are in the infancy of this growth curve

 

Even though Matt’s “Solid State Battery” portfolio in his Investment Opportunities newsletter is up over 35% (with one pick already up over 100%), investors today are getting in on the ground floor of this trend.

This is the type of investing where you find sector leaders, make your investment, go about your life for five or 10 years, then open your account statement one day to see your portfolio unrecognizable … multiples greater than when you started.

That’s the power of investing alongside an inevitable trend.

To learn more about Matt’s battery picks as one of his Investment Opportunities subscribers, click here.

Meanwhile, keep you eyes on Nikola and news of battery breakthroughs. We’re closer than ever.

Here’s Matt with the final word:

Just like current batteries are the “backbone” of your household today, solid state batteries will be the backbone of the Roaring 2020s and all its technological innovations …

The next battery breakthrough is one of the most important of our Roaring 2020s hypergrowth themes. It will be big. It will be exciting. And, most importantly, it will be profitable.

Have a good evening,

Jeff Remsburg