Michael Robinson this week is pitching his Nova-X Report with a promise that “we’re about to witness one of the most massive rollouts in history” as a new “magic electricity” ends the days of wires and plugs and dead batteries and makes us all filthy, stinkin’ rich.
So what the heck is he talking about? The promise is large and glorious, and designed, of course, to get you to hurry up and subscribe to Nova-X Report (which is his “entry level” report, $39/year currently) … and that promise incites daydreaming, with thoughts of cars that charge wirelessly, without big bulky high-voltage plugs… blenders that make you margaritas on the beach… coffeemakers that work inside your car.
That’s all in the service of picturing a world in which you own (a piece of) the core technology that makes wireless charging possible… which feels glorious and exciting. So let’s sample a few clues from the ad and see if we can name this stock for you, shall we? Here’s some of Robinson’s pitch:
“Now is the time to take this new energy VERY SERIOUSLY.
“As we speak, this tiny Silicon Valley firm is rushing to get their NanoCrystal Electricity technology fully adopted.
“They already have the three biggest multi-national manufacturer of electronics and chips on notice…
“Including Dialog Semiconductor, which has ponied up $25 million as a partner.
“If that isn’t a promise that this is going to happen any day now, nothing is.
“But it gets even more exciting.
“The company just announced they are currently working on integrating their remarkable technology with 56 other tech firms.
“This is just the beginning of a massive roll-out.”
Sounds pretty exciting… and with the Consumer Electronics Show getting lots of headlines, we can all imagine the cool new things that could be powered by wireless electricity. More clues?
“This tiny firm is about to have a sales bonanza!
“I added up the cash major industries are targeting for NanoCrystal Electricity. This includes electronic devices, electric cars, medical, military, and retail.
“I then estimated that this company locks-in a minimum of 20% of it all…
“For over $5 billion in revenue potential over the next couple years.
“Since this company is only three years old with only $4 million in sales so far, that translates into a 125,091% increase in revenues…”
That’s hooey, of course — anyone who starts out with a massive number for sales in a major industry and then says, “if this tiny company takes ‘just’ 20% of that market, the numbers will be astronomical!” is just using shock-and-awe math. Taking even 1% of a giant industry with a new technology is a gargantuan accomplishment, so take that with a huge grain of salt.
But, of course, “downplay” isn’t in Robinson’s vocabulary:
“We know they’re the leader in a revolutionary new technology…
“They should trade at a giant premium…
“They should have high operating margins (own the IP, outsources the heavy lifting)…
“Reasonably, half the company profits should drop into the stock price…
“Meaning this stock could pay out 78 times your money.
“And not over the next decade – over the next two to three years.”
So that’s the bold, headline promise: $1,000 to $78,000 in three years. Something to keep track of when we come back and look at this teaser in the future.
Why is all of this supposed to be happening now? What’s the urgency? Robinson says there’s an imminent catalyst:
“A green light on their NanoCrystal Electricity is expected any day now from the FCC.”
OK, so I’ll spare you my look at all the rest of the clues… because I need to jump in here and say that’s a little disingenuous. This ad just started running (as far as we can tell, at least) this week… and the ad is dated “January 2018” … but Energous (WATT) actually got their first FCC approval for an over-the-air transmitter at the end of December.
So yes, the Thinkolator identified that Robinson here is touting Energous (WATT), the wireless charging startup that’s been the subject of wildly overpromising hype-filled newsletter ads since it showed off its first prototype “over the air” charging system at the Consumer Electronics Show three years ago.
And there’s a reason for the excitement, of course — by all accounts, the technology is real, and consumers really do want to be able to charge their devices without plugging them in. After those two basic realities are covered, though, the actual investment prospect and product development timelines become radically more complicated.
Partly that’s because the company has a well-documented history over overpromising on its development timeline… and pundits and newsletters have loaded up on that overpromising, magnifying the impact on the stock price. The last time I had anything to do with Energous stock I was short the shares for a little while in the Summer of 2016, when a couple newsletters were loudly promising that Apple was on the verge of announcing that they would use Energous’ WattUp wireless charging in the iPhone 7 (which was, of course, a patently ridiculous claim).
Now, of course, the story has changed a little bit, because Energous has gotten perhaps the first really good news they’ve had since they made the partnership deal with Dialog semiconductor back in 2016 and added to it last Summer. They announced in late December that the FCC has certified its first “over the air” charging transmitter. Here’s part of that press release:
“The company’s WattUp Mid Field transmitter can deliver power via radio frequency (RF) energy to WattUp-enabled electronic devices at a distance of up to three feet. As the only technology that can do both contact-based and non-contact-based wireless charging, as well as charge multiple devices at once, WattUp is highly scalable and automatically charges devices, as needed, until they are topped off. While older charging technologies allow for only contact-based charging, Energous is the only company to achieve Wireless Charging 2.0 to-date, which is the ability to charge devices both at contact (including fast charging large battery devices such as smartphones and tablets), as well as power-at-a-distance. Similar to WiFi, the WattUp ecosystem ensures interoperability between receivers and transmitters, regardless of the manufacturer, making the entire ecosystem flexible and accessible for consumers and manufacturing partners….
“This represents the first time FCC equipment certification has been awarded to any device that charges wirelessly at a distance, and operates under Part 18 of the FCC’s rules. The FCC’s Part 18 rules permit higher-power operations than are permitted under the Part 15 rules that have been used to approve other at a distance charging devices.”
I haven’t seen what Energous was presenting at the CES this year, but they were reportedly there (and the CEO got some press, including this video interview) and they have talked up the release of the first WattUp-enabled products, including some new hearing aids and Myant’s SKIIN smart clothing line… both of those are still using the existing “near field” charger, which is essentially a contact charger that requires you to be within a centimeter or so of the charger, much like the current Qi standard chargers (such as Apple has adopted for their first iPhones that use wireless charging, or for the Apple Watch), but the promise is that although these are contact chargers, they use the same technology as Energous’ Mid Field and eventual Far Field transmitters and will be able to receive power from those future transmitters as well. So your $80 smart underwear will be backward-compatible.
The current forecast for availability of those distance transmitters is “late this year, early in 2019,” according to the CEO in that interview, and they say they’re “more comfortable” with those projections now that the chips have been produced and they have some over-the-air certification. I’m probably a little too cynical about Energous, given the several waves of massive hype I’ve seen from and about the company… I love the idea of “charging at a distance,” and Energous certainly gets most of the press in that space (though there are other technologies, including Powercast, which also uses RF power transmission, and Ossia’s Cota), but clearly there are technical or consumer challenges or this fantastical stuff we’ve been hearing about for years would be everywhere by now.
What are the analysts expecting? Well, some of them have probably been burned before, too, from the years of “a product is right around the corner” talk, but Oppenheimer’s analyst reportedly has an estimate for $3.9 million in revenue for 2018 and “material” growth in 2019, with a “bull case scenario” of maybe generating close to $400 million in revenue by 2021. That’s a pretty different scenario than Michael Robinson’s, both envision “20% market share” but Robinson calls it a $25 billion market (with $5 billion in revenue for Energous) and the Oppenheimer analyst apparently foresees a $2 billion market (with $400 million in revenue for Energous).
On the flip side, of course, there’s also still a lot of pessimism from the short sellers — Andrew Left, in particular, has been vocal in his criticism of Energous, but there are others as well… though the FCC approval may well have generated a “short squeeze” a couple weeks ago (short data that I see is usually pretty old, shortsqueeze.com says about a third of the stock is still sold short).
I think Energous’s WattUp is still a possible technology advance in search of a breakthrough product. Rosy scenarios for WattUp require that it get some kind of critical mass building, which very likely means that at least one high-profile and high-volume product is needed, and I have no insight into what product that might be or when it might happen. I expect we’ll probably see Apple rumors for WATT again this year, too, though I think anyone expecting Apple to be the first adopter of WattUp is likely to be disappointed. Apple hasn’t been much of a risk-taker on that front, they tend to prefer to perfect proven and established technologies.
The good thing is that they are very small, with a market cap of $400 million or so, so even though their finances are rickety and they keep selling equity every time they have good news that drives the shares up (as most cash-burning companies do, wisely), and even though the insiders are steady sellers (as is typical of tech startups, where stock is a major part of compensation), there’s almost always an optimistic scenario lurking under the surface if you’re willing to take the chance on the technology and the management team.
WATT is not particularly appealing to me, and I think Michael Robinson is way out in left field with his projections in this ad, since the meaningful technology won’t even be available for purchase within a year, let alone taking 20% of the market in three years (and is a long way away from being ready for high-power applications like car charging… with even cell phones arguably being a little bit of a stretch at this point), but stock speculators are hopeful and optimistic folks… maybe this one will work out.
And Robinson throws a few extra “bonus” recommendations on the pile that are secondary plays on the huge gains he sees for Energous and for wireless charging in general, including some chipmakers and such, so he’s very likely also recommending Dialog Semiconductor (DLG in Eurpe, DLGNF OTC in the US), which fell 30% in the past month on bad news about Apple orders, and perhaps Taiwan Semiconductor (TSM), to whom they’ve also been linked in the past… WATT will not have a material impact on either of those companies’ income statements over the next year, though there is potential that Dialog will eventually get a boost, as the chip manufacturer, if Energous actually builds a very large business someday.
Sound like your cuppa tea? Excited about the possibilities? Exhausted by the hype? Let us know with a comment below.
Disclosure: I own shares of Apple, but am not invested in any of the other companies mentioned above. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.