I totally agree that the Metaverse is on the horizon if not already here in its infancy. That’s the root of the NFT craze. I used to own both U and RBLX. You’ll note that I’m easily terrified, but I got scared out of both when I read a deep dive on the financial problems Roblox was hitting due to Apple’s chokehold on the apps and games available through its store.
I wish I could find the article now, but the essence was pointing out that it’s not that Apple gets a one-time 30% cut. It is constant. When you play a game from the app store, you play it THROUGH the app store and they get that 30% cut of everything, all the time. Since Roblox is also paying out to its developers, there ends up being very little left for the company. That is the root of the lawsuit against Apple from Epic Games (Fortnite).
Unity (U) is definitely the bones, and they are solid bones. And the stock has done much better since I sold it (you’re welcome). But I decided to throw the chips from both into a starter position in ironSource (IS), that just went public via a SPAC in late June. They help developers build games, apps, and whatever else with Unity or other engines. But their primary offering is a platform to help those developers take what they create to market and build a business. As they say, “One platform to turn your app into a business.” https://www.is.com/. It’s yet another Israeli company. They report on Wednesday morning, so I may be out by Wed afternoon, but the more services can be bundled together in a platform, the more I like it.
When do individual stock pickers get disrupted? One could argue that we already are disrupted, since automated trades already make it nearly impossible to get the best prices–either when we get in or when we get out.
AI will take over picking by the numbers. AI is built for that. But it isn’t just numbers that make a business successful. Just like there is always a role for human intelligence in our Intelligence Agencies, so I think there will always be a role for humans to piece together the data points that make for a great company.
There is a company I held for awhile called Schrödinger (SDGR). It’s in the healthcare sector. The problem it’s trying to solve is the issue pharmaceutical researchers have in finding promising drugs to test. It’s a needle in a haystack problem and with a long time to test a drug adequately, the failure rate is high. SDGR uses AI to run through thousands of potentially useful drugs, pulling out only the ones with real promise. Those are then sold to researchers.
I think the equivalent of a Schrödinger for companies, especially micro caps, would be an amazing gift. Then humans can take the numbers and maybe other data points and do what humans do best in a comprehensive evaluation of every aspect of the business, its management and culture, societal and global trends, and the idiosyncrasies of human behavior to suss out the Upstarts of the world. And the more humans trying to get at that together, the better the result will be.