Weekly Bot Brief Newsletter on Robotics 9/18/2020
"There is no force on earth more powerful than an idea whose time has come." - Victor Hugo
Bots in The News:
Following two consecutive down weeks, the Bot Index eked out a gain of 85 basis points in mid-month trading. The small gain, however, exceeded the 64-basis point decline recorded by the S & P 500. Unlike the prior two weeks outperformance of the broader market, the Bot Index did not have to rely upon the Asian components to post superior results. In fact, two different domestic names each provided double digit returns without depending upon an earnings report.
The best performance for the week was recorded by Tesla. Their 18.63% gain was attributed to the excitement associated with Tesla’s annual ‘battery day’. Investors expected the company to announce new, faster, cheaper, and more environmentally friendly production of batteries. Even more significant was the prospect of the long sought ‘million’ mile battery which would vastly impact the entire EV industry. One analyst, during the week, posted an expected target for the stock at $515, a gain of another 16% over Friday’s closing price.
Accuray Inc. added 17.26% as the company announced that a number of hospitals in Japan have adopted the company’s Radixact System with its Synchrony Automatic, Real-time Motion Synchronization Technology. The product allows precise radiation doses to tumors which protects surrounding healthy tissue. The company announced the world’s first liver cancer treatment using the new product combination.
Other gainers included NIO (+8%), Brooks Automation (+6.41%) and Oceaneering International (+4.51%).
The weakness in the technology stocks has been attributed to many of the ‘majors’ in the NASDAQ sector. Specifically, Amazon fell 5.18%, Google declined 4% (both of which have fallen three consecutive weeks) and Intuitive Surgical slid 6.69%.
So Few Robots, So Few Productivity Gains:
According to a mid-week report by CNBC, industrial robots are not widely used by corporations and even the biggest users are not altogether pleased with their results. The exposé noted that robots are used only by 1.3% of U.S. firms. The feature, entitled “Why Amazon Warehouses and Tesla Auto Plants Will Not Go 100% Robot Any Time Soon.” was based upon research conducted by MIT’s Sloan Management Review. The authors of the piece wrote, “Most companies which invest in automation on a grand scale are likely to see their efforts fail, while those that succeed will be atypical.” In the piece it was stressed the lack of flexibility was the principle cause of behind firm’s lack of participation in the Robotic Revolution. While this might have been be true a few years ago (the research included tweets by Elon Musk in 2018 and data from the 1980’s by GM!), changes in the industry are rapidly expanding into a massive variety of capabilities that will be required by companies that wish to develop faster, more reliable and precise production techniques. Moreover, the research centered on industrial applications and completely ignored medical, communication, transportation, and other industries. If, however, the use of robotics is only utilized by 1.3% of corporations, perhaps that is why, manufacturing sector productivity decreased 14.6% annual rate, in the second quarter of 2020 while unit labor costs increased 29.1%. If this trend continues, perhaps more manufacturers will be induced into greater robotic implementation.
Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association, Member IEEE.
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.