Nanalyze

Investing in Nanocrystal Electricity Stocks

We write about more than 30 different disruptive technologies here at Nanalyze, with the sole intent of uncovering opportunities for retail investors to get exposure to exciting themes like robotics or gene editing. We’re always on the lookout for the next big thing, but many times we come across themes that just don’t pan out. It seems like lots of these themes that don’t pan out end up being promoted by over-the-counter (OTC) stocks or financial newsletters.

We offer our insights for free, but many investment newsletters don’t. A typical spiel will be to list out dozens of amazing facts about a particular technology, and then say that there’s one stock that everyone should own to get exposure – and you can find out the name of the stock if you subscribe to a newsletter, buy a report, or provide your email. It’s a clever tactic that never fails to reel in loads of leads, so when one of our readers asked us about “nanocrystal electricity”, we decided to take a closer look.

Take for example this email which elicits the reader to click on links that lead to a video which rambles on at length about the “opportunity” in nanocrystal electricity:

Newsletter promoting nanoelectricity stocks

Source: Our inbox

Let’s set aside the fact that no self-made millionaire has ever managed to accumulate their wealth through some secret 10-minute shortcut, and instead focus on what’s being talked about here. It’s something the newsletter calls “nanocrystal electricity”.

What is Nanocrystal Electricity?

It’s wireless electricity, that’s it. How do we know this to be true? Simple. The Washington Times article the email referenced was published back in 2014, and the title of the article was “Tesla and wireless energy: The power that could have been“. Then we have the following quote:

David Pogue, the award-winning tech journalist from Scientific American, says, “We’re looking at the future of technology”

Plug that into Google and we get an article published on Yahoo Finance by David Pogue called “Is through-the-air charging a hoax?” which revolves around a company we’ve talked about before called Energous.

Energous and Nanocrystal Electricity

We first wrote about Energous (WATT) four years ago when they had their IPO. We didn’t like what we saw at the time, saying the stock seemed “highly speculative as the company has no granted patents, a prototype that is too large, just a small amount of cash on hand, no revenues, and some transactions in the past that could be considered conflicts of interest.” Fast forward to early 2017 and wrote about WATT again when the stock price doubled on the heels of a strategic partnership they entered into with Dialog Semiconductor (Note that Dialog Semiconductor is merely 4X the size of Energous, but profitable, with over $1 billion in yearly revenues.)

In November of 2017, Dialog agreed to make a $10 million investment in Energous and become the exclusive component supplier of its wireless charging technology known as WattUp. Note how we are talking about “wireless charging” which is what David Pogue wrote about. In looking through the latest 10-K from Energous, not one mention is made of “nanocrystal” anything. In fact, not once are the words “nano” or “crystal” used in the entire document. So whoever decided to start calling wireless charging “nanocrystal electricity” should be slapped. Henceforth, we will try to never use this term again, and instead talk about “wireless charging”.

Energous and Wireless Charging Technology

Energous describes their technology as consisting of

“…proprietary semiconductor chipsets, software, hardware designs and antennas that enables radio frequency (“RF”) based charging for electronic devices, providing wire-free charging solutions for contact-based charging and at-a-distance charging…” and they use “…small form factor antennas that are formed using the existing device’s printed circuit board, removing the need for larger, more expensive coils…”

The idea of wireless charging is hardly new, and there are many ways to accomplish the same thing. Energous cites at least six competing methods, including ultrasound, conductive charging, and magnetic resonance. These methods are currently used by various other companies trying to bring wireless charging mainstream, including five startups we covered in a past article. One company we haven’t talked about yet is Powercast Corporation, and that’s a good segue into our next topic.

Energous and FCC Approval

The latest news from Energous is that they’ve received FCC approval for their technology. In fact, they’ve received quite a few FCC approvals over the recent years which can be seen below:

Source: Energous 10-K

As award-winning tech journalist David Pogue pointed out in his comprehensive article on the topic, this means rivals can get approval as well. One such rival is a company called Powercast Corporation which claims to have the “industry’s first over-the-air, far-field (up to 80 feet) RF charger for consumer devices to get FCC nod“. Based out of Pittsburgh and with an undisclosed amount of funding, Powercast has been selling products in the wireless charging space since 2010, and expects standalone production units to be available in Q3 2018 for about $100 from distributors Arrow Electronics and Mouser Electronics. Whether or not they hit that date remains to be seen, but the point is that Energous isn’t the only company out there getting regulatory approvals. If you’re interested in learning more about Powercast, here’s a deck with all the details.

Investing in Nanocrystal Electricity Stocks

We’ve talked before about what a flawed strategy it is to try and “find the next Microsoft“. That’s what’s being peddled here, and the analogy is even made in the long, drawn out video the email tries to get you to watch:

Source: Some pitch on “nanocrystal electricity”

The truth is that most people accumulate wealth through boring old investment strategies like dividend growth investing. Forget for a minute that Energous is a $468 million company that generates paltry revenues which have declined for each of the past three years, while burning increasingly huge amounts of cash each year while we all wait for the company to start shipping products.

Source: Energous 10-K

Forget about all the competing companies and technologies in the wireless charging space, the fact that Energous stock appears to be heavily promoted using the term “nanocrystal electricity”, and the fact that short sellers are saying that Energous stock is worthless. Ask yourself if you really think it’s a good idea to take investment advice from someone who published a book on “The One Secret Anyone Can Use to Turn $2,500 into $1 Million or More“.

Folks, there is no shortcut to get rich. It requires a great deal of work, the ability to consistently save the money you earn and not spend it on $5 coffees, and the willingness to invest your money in “boring” stocks that have a track record of creating shareholder value. We hate to break it to you, but you’re not going to get rich “investing in nanocrystal electricity stocks”.

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