Neuralink, Elon Musk’s newest business devotion, has gathered massive attention from mainstream financial media pundits and tech investors. But, can you buy stock in Neuralink?
It’s a phenomenal question to ask because the artificial intelligence behemoth could be one of the most profitable investments for decades to follow!
In a world of extremely low growth, ZIRP, and TINA, Neuralink stock could be the place to garner necessary yield.
As Elon Musk has become the world’s wealthiest person, interest in another IPO has been off the charts. Investors are salivating at the thought of scooping-up another Musk investment into their portfolios.
Business Insider wrote a great piece on Musk’s next project.
“Tesla CEO Elon Musk has an unusual passion project: a neural tech company called Neuralink that wants to put wires in people’s brains.
Musk co-founded Neuralink in 2016, and it remained under the radar until 2017, when the Wall Street Journal broke the news that he had established the company to “merge computers with human brains.”
But Neuralink zeroes in on one of Musk’s main fears, artificial intelligence. The entrepreneur has frequently been vocal about his worries that AI could one day overshadow the human race.
He’s founded a general-purpose research organization called OpenAI, but Neuralink has a much more tangible, futuristic goal of making AI-enabled devices capable of interacting with people’s brains.”
The mission statement behind Neuralink is “developing ultra high bandwidth brain-machine interfaces to connect humans and computers.”
Now, lay people (myself included) are highly skeptical surrounding the effectiveness in connecting the complex brain to a computer chip.
Even more likely, I have heavy doubts that many people would volunteer to be the first generation test dummy.
Rise of AI and Neurological Disease
Elon Musk has pronounced a dire message that humans risk being overtaken by artificial intelligence within the next five years.
The prediction marks a significant revision of previous estimations of the so-called technological singularity, when machine intelligence surpasses human intelligence and accelerates at an incomprehensible rate.
His hot take is in direct contradiction to other intellectual giants (Naval Ravikant and Nassim Talleb) who believe we are nowhere near complex, creative thinking artificial intelligence.
Currently, artificial intelligence is used to replace mundane, repetitive human tasks. For example, a robot could replace a human on the car assembly line.
However, there aren’t robots writing creative poetry; although, we are getting close with the rise of deepfake and article scraping algorithms.
Concurrent to the rise of AI, neurological diseases and disorders are skyrocketing throughout the developed world. Here are a few of the most dangerous and disheartening.
- Bell’s Palsy
According to the ALS Association, every year about 6,400 people in the United States are diagnosed with ALS. They also estimate that around 20,000 Americans are currently living with the disorder.
ALS affects people in all racial, social, and economic groups. This condition is also becoming more common.
Profitability and Inelastic Demand
“Inelastic demand in economics is when people buy about the same amount, whether the price drops or rises. This situation happens with things that people must have, like gasoline and food.
Drivers must purchase the same amount even when the price increases. Likewise, they don’t buy much more even if the price drops.”
Ehh, who cares? It’s all textbook economic theory, right? Well, not necessarily, and health care has the most inelastic demand compared to any other good or service.
Just reflect on your own personal experience. How much would you be willing to pay to keep your most beloved family member alive and healthy? I would certainly pay a fortune!
Musk devotes his life to important efforts by applying massive leverage and scalability to systemic problems. Climate change, energy independence, traffic congestion, and human disease to name a few.
Leverage, in this case, does not mean debt, but it refers to using technology to amplify potential impact.
Neuralink (like Tesla) may not be very profitable, but it would be incredibly important for the advancement of the human race. Musk is much more interested in making the world better than money.
Yes, he’s worth approximately $100 billion, but Tesla has yet to achieve profitability without selling regulatory tax credits.
UBS published a research report on the exponential growth in AI.
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“By the end of the decade, we believe the recent rapid advances in AI will eventually plant progress firmly into the AGI phase, the beginning of true autonomy.
AI-powered machines and software will likely start to untether from human supervision, embarking on their fateful path as sentient beings. But this will happen much later in the distant future.
In the next four years, however, we believe AI’s industry growth will start to explode and its impact on businesses and society will begin to emerge.
According to our estimates, the AI industry was a $5 billion marketplace by revenue in 2015, a respectable size for such a budding sector.
By 2020, we believe exponential improvements and broader adoption should more than double revenue to become a $12.5 billion industry.
This represents a 20% annual growth rate. Assuming enterprise value/sales multiples of 10-15x, which is on par with other emerging fast-growing industries within the tech sector.
AI as a standalone industry has the potential to claim a total market cap of $120-180 billion by 2020.”
Now, think about how much revenue could be created by developing the initial patents and backbone of AI. Well, unless Musk gives away the patents for free like he does for Tesla.
Neuralink Stock IPO
“An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance.
Public share issuance allows a company to raise capital from public investors.
The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment as it typically includes share premiums for current private investors.”
Taking a company public can be EXTREMELY profitable for early investors, and it is certainly plausible Neuralink will IPO in the near future.
Currently, Neuralink remains a privately held company, and it may never go public. Why? Two words. Short sellers.
Musk is a longtime critic of short-sellers; these are investors who make money when a stock price falls. Musk believes business is more than simply maximizing short-term shareholder value.
In a hilarious stunt, Musk used short shorts to taunt Tesla short-sellers (Steve Eisman was the most notable).
Additionally, privately held companies do not have to comply with federal securities regulations, compliance standards, and appeasing investors. It also avoids hostile takeover attempts.
Neuralink Stock Price
CNBC has an interesting company cover story on Neuralink.
“Experts point out Neuralink has something going for it: Musk’s deep pockets and star power.
In 2019 Musk invested $100 million Neuralink, according to The New York Times. In total, Neuralink has raised a total of $158 million and is estimated to be valued at just over $500 million, according to PitchBook.
TK (Takashi D.Y.) Kozai, an assistant professor at the University of Pittsburg’s Department of Bioengineering, who says he interviewed with Neuralink in the company’s early days, was told by a former Neuralink “insider” that the company spends generously.”
Because Neuralink stock would have the same CEO as Tesla, I can make some assumptions about capital structure and outstanding equity.
Per close of fiscal year 2020, Tesla had roughly 905 million shares outstanding. Pair this with an additional bump in IPO publicity, and we have a final proxy calculation.
Based on an estimated $500 million start-up valuation and shares outstanding, Neuralink stock would appraise at approximately $5-10 per share.
I have no doubt that the IPO price would definitively jump far beyond this price, purely based on the publicity and media coverage it would receive.
I’m not saying it would be a good long-term hold, but it definitely presents a short-term trading opportunity if ever available!
Narratives Drive Stock Price
The big story of 2020, going into 2021, was the monstrous bounce off the crash in stocks, real estate, commodities, and virtually every single asset class.
There was ultimately a big question surrounding how investors valued asset prices? Did they care about discounted cash flow valuations? Was everything about momentum? Did only the narrative matter?
Evidence mounted that “earnings don’t matter”, and value investing was dead. I think Warren Buffett may suggest otherwise, but the greatest asset returns are in high-tech, growth stocks.
What do all those investments have in common? They have an extremely appealing narrative!
Neuralink Stock Alternatives
Neuralink isn’t the only way to profit off the genius of Elon Musk or artificial intelligence. I might not be smart enough to design this product, but I can invest my capital and savings for a return on investment.
- The Boring Company
Can You Buy Stock in Neuralink?
Currently no, you cannot buy stock in Neuralink, but you will be able to purchase shares in any future IPO. Based on share count, the price could range from $5-10 per share.
It’s a wonderful question to ask because Musk has heavily rewarded his Tesla investors and could make Neuralink IPO investors a fortune! Keep your eyes out for any future movement in the company.
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