This installment of The Matt Allen Letter is free for everyone. If you would like to read about stock analysis, stock market analysis, and much more. You can subscribe here.
In 1994, Jeff Bezos famously left his high paying Wall Street job to start an online book store. His parents, in-laws and co-workers were laughing at his idea. They begged him not to quit his job. In fact, his boss at the time said the idea sounded great but for someone else to do not him.
Jeff Bezos started Amazon in 1994 because of a stat that he heard about the internet. He heard that it was growing 2,400% a year.
In this newsletter, I am going to share with you insane stats that have inspired people to start companies and inspired other people to invest in companies or trends.
I believe that a great investor should always be on top of the trends that are here or will be here in the future.
1. Cloud Kitchens
Cloud kitchen Market to surpass USD 159.1 billion by 2030 from USD 53.3 billion in 2021
Cloud kitchens had their breakthrough moment during Covid-19.
If you didn’t know, Cloud Kitchens are facilities that provide a kitchen for restaurants to cook food and then have the food delivered. This allows the restaurants to have minimal overhead.
For example, let’s say that me and you want to start an Italian restaurant that is delivery only. We would rent space from a cloud kitchen to cook the meals, list our restaurant on doordash/uber eats and then our customers would have the meal delivered to them via the app. We would never see our customers in-person.
Travis Kalanick was the founder of Uber. However, he left Uber to start a Cloud Kitchen empire.
You might of realized that Chick-Fil-A has really focused on their drive thru in recent years. In my opinion, this is them innovating for the future of cloud kitchens.
If you are familiar with the Youtube Star Mr. Beast, he created a “Beast Burger” that companies were able to sell through DoorDash and Uber Eats. They sold millions of them. This isn’t a cloud kitchen, but it is an indication of where the food industry is headed.
2. Electronic Systems Of Cars
In 1970, the cost of an electronic system was 5% of the total car cost. In other words, if you built a car for $10,000, the electronics only cost $500.
However, by the year 2030, the electronic system of a car is expected to be 50% of the total cost of the car.
Self-driving is not going to be the only advancement when it comes to "car computers."
This is due to the code, the semiconductors, malware, app stores, and ect.
If you didn’t know, the Ford 150 has 150 lines of code in the car to allow it to operate.
One of my favorite emerging companies is Amplitude, and I plan on doing a deep-dive into that stock in the near future for our premium subscribers.
3. Shortage of Semiconductor Employees
If you didn't know, semiconductors are the backbone of every single piece of technology hardware that you use including your car.
The New York Times predicts that in 2025, we will have a massive shortage of semiconductor workers.
In fact, The USA may be short 300k semiconductors workers by 2025.
Intel has earmarked $100B+ on chip fabrication plants in coming years. Its competitors Samsung and Taiwan Manufacturing Semiconductor Company are putting up similar sums. This is an insane amount of money to be putting up for plants.
The skill shortage is gamut from technicians to run the plants to researchers to design the newest chips.
One big issue: Today, university grads with engineering degrees especially Phds are taking their degrees to software, which often pays better too.
The other major problem is that semiconductor manufacturing relies on extensive process knowledge based on decades of experience and skilled workers. Producing a single chip takes 1500 steps and up to 6 months.
Regardless, Semiconductor companies are some of the best investments that you can make.
4. The fastest growing 10-yo company isn't in software. It's a lithium-ion battery company: CATL.
Think of the fastest growing ten year old companies ever at scale. Which come to mind? Probably a tech company. Maybe Google, Facebook or Amazon.
Nope. It's the leading lithium-ion battery manufacturer.
Contemporary Amperex Technology Co Ltd., better known as CATL, is a global energy technology company and the leading EV battery manufacturer in China. As a supplier to major EV automakers like Tesla, CATL has plenty of clients demanding its products, helping the company grow its capacity of installed EV batteries.
CATL is once again the largest in the world by installed battery capacity.
This is huge because we always think that software has absolutely dominated hardware in terms of growth.
Cyber insurance loss ratios have increased for years, despite exponentially growing rates.
Loss ratio = (costs + claim payments)/premiums
In other words, cyber security is becoming an exponential issue. The funny thing is that companies have slowly increased their funding of cyberdefense but cyber attacks have increased like crazy.
If we go back to stat number 2, you have to really ponder how much a company like Ford is going to pay to protect their cars from cyberattacks.
I believe that the cybersecurity industry is one of the best industries to be invested in over the next decade. In fact, I believe that the next 9/11 will be a cyberattack.
In the long term, CyberSecurity is a secular growth industry. What this means is an industry that will explode in the coming years.
Do you remember the colonial pipeline hacking disaster? This is a great example of what our future could look like not only this year but in the coming years.
In response to these attacks, the global enterprises has upped their I.T. spending to a total of $3 Trillion on a global basis. The pandemic was a huge moving force for this increase of spending as things moved digital and to the cloud.
I sent some of my favorite cybersecurity stocks to our premium subscribers that you can view here.
Bonus: The OG lab-grown burger costed $330k in 2013.
Now, 1lb of lab-grown chicken costs $7.70, down from $18 mid-2021.
And 1 kg of lab-grown shrimp? The cost went from $7,398 in 2019 to $37 in 2022 to $4 in 2026.
In 2500, people will look back and think it's crazy that we bred and killed animals the way that we do today.
I hope everyone has a great rest of the week, and we will talk soon!
Stay hungry, stay long