Mentioned Companies: AVAV, FB, NVTA, TWTR

#260: For the First Time at Point of Sale (POS), Digital Wallets Have Surpassed Cash Globally, & More

#260: For the First Time at Point of Sale (POS), Digital Wallets Have Surpassed Cash Globally, & More
by ARK Invest, March 01, 2021

1. For the First Time at Point of Sale (POS), Digital Wallets Have Surpassed Cash Globally

According to a recent study by Worldpay, last year digital wallets surpassed cash for the first time as the number one payment method at all points of sale (POS) globally. In e-commerce alone, digital wallets have dominated checkouts since at least 2018, the year that Worldpay published its first Global Payments Report.

By offering inexpensive and rapid access to financial and other commercial services like e-commerce, digital wallets on mobile phones could become the dominant app for both personal finances and shopping around the world. Leading this trend is Asia where digital wallets have dominated ecommerce payments since 2018, if not earlier, and POS transactions since 2019. Motivated to change behavior patterns during the COVID-19 pandemic, consumers elsewhere seem to be following Asia’s lead, as digital wallets now are the second most popular e-commerce payment method in North America.


2. Live Audio Is A Feature, Not A Product

Prior to 2021, ‘live audio’ referenced traditional radio, more specifically talk radio. Boring, right?

Today thanks to Clubhouse, an audio-based social media platform, ‘live radio’ has taken on new meaning. Founded in April 2020, Clubhouse allows users in virtual rooms to listen to and participate in conversations. Less than a year later, the company is valued at $1 billion now that user growth is skyrocketing.

Despite its recent growth and lofty valuation, we are wondering whether or not Clubhouse has staying power. Like many new apps, Clubhouse has its flaws but, more important, as an entertainment medium live radio could become more of a feature on many social networks, not a standalone product.

During the next year, we would not be surprised to see Twitter, Facebook, and other apps roll out live audio capabilities. Clubhouse will have to demonstrate that its service provides more value than, say, Twitter Spaces.

If, as we believe, live audio is a feature, not a product, then Clubhouse probably will find it difficult to come out on top. More likely, the live audio market will fragment, with each service playing a niche role.


3. Could A Therapy Derived from the Human Microbiome Be Successful in Treating Cancer?

The microbiota in the human gut include 10-100 trillion microorganisms, mainly bacteria, whereas the microbiome refers to the bacteria and its genes. These microorganisms are important for the digestion, absorption and the synthesis of enzymes.

One of the leading causes of death, cancer accounted for almost 2 million new diagnoses and 600,000 deaths in the US during 2020 but could be a prime candidate for microbiome therapeutics. Recently, researchers at Sheba Medical Center evaluated the transplantation of fecal microbiota (FMT) from two metastatic melanoma (MM) patients who responded to PD1 checkpoint therapy into ten patients who had not responded and had few therapy options left: 30% (3/10) of those patients responded to FMT. Typically, only 40% of all MM patients respond to PD1 therapy and have an average life expectancy of only 16-22 months. While the results from this small patient population are encouraging, important to understand will be data on FMT’s main drivers and mechanisms of activity.

Because FMTs are difficult to manufacture and scale, with safety concerns paramount, scientists have developed a novel therapeutic, one which takes bacteria from healthy donors and creates an oral therapeutic to restore gut microbiome health. Recently, early but convincing evidence suggests that an oral microbiome therapeutic could treat patients with recurrent C. difficile: the study demonstrated a statistically significant 30% reduction in the recurrence of C. difficile compared to placebo. Signaling the importance of this research effort, Invitae (NVTA) acquired One Codex, a company that is maximizing the quality and minimizing the costs of sequencing and testing gut microbiomes.

Relative to FMTs, oral microbiome therapeutics could be safer and more scalable in boosting immune responses to cancer. They also could apply to autoimmune diseases and provide solutions to medication resistance.


4. AeroVironment’s Acquisition Boosts its AI Capabilities

This week AeroVironment acquired Progeny Systems Corporation’s Intelligent Systems Group (ISG), which provides machine learning, computer vision, and perceptive autonomy solutions. AeroVironment plans to integrate Progeny’s ISG into its product portfolio of unmanned ground and aerial vehicles. Machine vision and autonomy are likely to become important components in all vehicles on the ground and in the air.

Like AeroVironment, Progeny Systems supplies its solutions to the US Government, specifically the Department of Defense (DoD). Based on that exposure, ARK wonders if AeroVironment’s fleet learning could be hindered by an inability to save and share secure government data. In contrast, commercial drone operator can perfect flight algorithms with data scraped from many customers. While military drone suppliers have focused on building robust and rugged machines that meet the government’s high standards, commercial drone suppliers could have a machine learning software advantage. That said, ISG could benefit AeroVironment’s autonomous strategy in its smaller commercial solutions division.

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