#363: ARK’s Expected Value For Tesla Is $2,000 Per Share In 2027, & More

Last week, we released ARK’s updated Tesla model and an article delineating our assumptions. By engaging directly with the model on GitHub, anyone can modify one or more of our 40+ assumptions and see how the expected value changes. We look forward to hearing your feedback.

Our modeling suggests that autonomous robotaxis will impact Tesla’s future value significantly. In our view, the company should maximize today the production and sales of autonomous-capable vehicles, given the option value of software-as-a-service (SaaS)-like margins. As its cost structure continues to fall in line with Wright’s Law, Tesla should continue to lower prices, accelerating the shift toward an autonomous taxi platform.

On April 12, the Ethereum network reached another important milestone that enabled withdrawals on its Proof-of-Stake (PoS) network. After the network’s successful “merge” to PoS in September 2022, the Shapella upgrade completed its transition from Proof-of-Work (PoW) mining that began with the launch of the Beacon Chain in December 2020.

While positive for the network, now the question is how the new withdrawal functionality will impact the price of ether. Will unlocking ether that has not moved since December 2020 create selling pressure, or will the introduction of liquidity into ether staking and the de-risking of Ethereum’s technical roadmap attract new entrants? The price of ether rallied from $1920 to over $2100 right after the April 12^th upgrade, then settled back toward $1900 last week, so the answer is not yet clear.

In our view, withdrawals will outpace deposits during the next few weeks, particularly as the U.S. Securities and Exchange Commission (SEC) forces exchanges like Kraken to abandon staking in the US and settle with the SEC. That said, those withdrawing ether today may not be sellers over the longer term, as increased liquidity could make staking as attractive on Ethereum as on other PoS blockchains. For context, today ~15%¹ of ether is staked, a low percentage compared those on PoS blockchains like Cardano, Polygon, and Solana with staking ratios² at 66%, 39%, and 72%, respectively.

As the new withdrawal functionality evolves, Ethereum also is likely to scale its network transaction fees. Given the recent launch of zero-knowledge, proof-powered scaling solutions from zkSync and Polygon, in addition to the higher token activity associated with the Arbitrum rollup, the throughput of Ethereum’s “layer 2” networks is nearly four times the throughput³ of the base layer. Also important to note, higher network activity “burns,” or lowers, the circulating supply of tokens, which over the last 30 days has declined at an annualized rate of 0.4%.⁴

[1] Based on data from Ethereum Shanghai Unlock as of April 21, 2023. https://token.unlocks.app/ethereum-shanghai
[2] Based on data from Staking Rewards as of April 21, 2023. https://www.stakingrewards.com/?sort=marketcapUsd_DESC
[3] Based on data from L2 Beat as of April 21, 2023. https://l2beat.com/scaling/activity
[4] Based on data from Ultra Sound Money as of April 21, 2023. https://ultrasound.money/

CRISPR-Cas9 is one of the most common gene-editing tools, not only for drug discovery but also for clinical treatments. In both cases, research groups have shown that CRISPR gene-editing can create unintended, large-scale mutations. While those studies were small and did not delineate fully the frequency and mechanisms of the adverse effects, scientists at Recursion Pharmaceuticals (RXRX) have characterized this phenomenon in depth with its ultra-high-throughput phenomics platform, contributing critical knowledge about the bias and safety of CRISPR-Cas9-based gene editing.

The authors used CRISPR to knock out (KO) virtually every human gene (n=17,000) with more than five guides per gene in multiple human cell types. The team then leveraged the unique throughput of its microscopy platform to measure the cellular effects of different gene KO’s.

Surprisingly, the researchers discovered that a small fraction of cells undergo “proximity bias.” Prior to editing, CRISPR-Cas9 causes a double-stranded DNA break (DSB) that can damage genes proximal to the target gene on the same chromosome arm. Then, the body mis-repairs the damage, causing proximity bias. The researchers confirmed these results using RNA sequencing.

Fortunately, the team also realized that a simple mathematical correction could mitigate the biasing effect when labs use CRISPR for biological discovery. Recursion’s new insights are important and should guide biopharma companies’ use of CRISPR, particularly in understanding the risks associated with proximity bias—and ways to mitigate them.