Weekly Bot Brief Newsletter on Robotics 3/8/2019

"There is no force on earth more powerful than an idea whose time has come." -Victor Hugo

Bot Index Highlights:

What the market giveth, the market can take away. That was certainly evident in the trading of NIO Inc. last week. You may recall the prior week where, fresh off a 60 Minutes TV feature, the company gained 23.13%. Unfortunately, the prospects changed for the Chinese electric car manufacturer as investors brought down the stock a massive 29.82%. Not only were investors spooked by the recent earnings announcement and lowered guidance, but Elon Musk chose this week to announce its Model Y as well as the price tag on the Model 3 at $35,000.

While there were no other double-digit decliners in the Index’ components, there were plenty of stocks that gave up over 5%. In fact, almost one third of the components contributed to the 4% drop in the Index’ value by experiencing significant reversals. Closing in on the 10% decline level was 3D Systems whose 9.97% drop carried the stock down to $10.93, very close to the $10 target that a Bank of America analyst placed on the stock two weeks ago. Other weakness in the Bot Index included the 9% slide in Oceaneering International as Norway announced it was selling all its oil holdings within its $1 trillion sovereign wealth fund. Other notable decliners included Cognex (-5.84%), Textron (-6.12%), IRobot (-5.68%), Accuray Inc. (-7.56%), Immersion Corp. (-5.01%), Ekso Bionics (-7.79) and Hiwin Technologies (-7.76%). Many of the above names had been superior performers this year and their plunge this week was likely investors pruning their top gainers in a weak market for technology names.

On the positive front there were only four gainers within the index. Three of those up stocks were Asian, with OMRON Corp. the best performer, up 10.70%. Cyberdyne rose 4.59% while Keyence Corp. and Google were up minimally.

Apple Again:

While it is virtually half a year away, speculation abounds regarding Apple’s next iteration of its iPhone. Whether it will be called iPhone 11 or (perhaps in deference to Chairman Xi of China) iPhone XI, the anticipated features may well be worth the current price tag of iPhone XS Max. We will have to wait and see if the new phone’s features will come at an even higher cost. Some of the extras that have been discussed include a foldable screen, a triple lens camera and, most significantly, a 5G connection.

In reviewing the enclosed chart on the shares-to-phone cost, the volatility of the ratio has been significant over the past few months. With no change in the phone price, the only variable has been the price of the stock. Having traded to a level near the five to six share per phone during much of the second half of 2018, the ratio skyrocketed by almost double during the early months of 2019. Since 2012, the average of shares to product was 6.52. At the current level of almost 8.50, any reversion to the mean would come only with a reduction in the price for the phone or an increase in the price of the stock. Since the management of Apple can  impact the product price and can only marginally influence the stock value, we would anticipate either a phone discount or a significant increase in the dividend. Either course could bring the ratio closer to reality.

Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association.

The Bot Brief is a weekly newsletter designed for economists, investment specialists, journalists and academicians. It receives no remuneration from any companies that may from time to time be featured and its commentaries, analysis, opinions and research represent the subjective views of Balcones Investment Research, LLC. Due to the complex and rapidly changing nature of the subject matter, the company makes no assurances as to the absolute accuracy of material presented