Investidea: AppHarvest, because the harvest has ripened

Инвестидея: AppHarvest, потому что урожай поспел

Today we have an insanely speculative idea.: take shares of agricultural startup AppHarvest (NASDAQ: APPH), to make money on their rebound.

Growth potential and duration: 37,5% for 2 of the year; 292% for 7 years; 587,5% for 20 years.

Why stocks can go up: they fell hard, but their speculative rebound is possible..

How do we act: we take shares now by 5,15 $.

When creating the material, sources were used, inaccessible to users from the Russian Federation. Hopefully, you know, what to do.

No guarantees

Our reflections are based on the analysis of the company's business and the personal experience of our investors, but remember: not a fact, that the investment idea will work like this, as we expect. Everything, what are we writing, Are forecasts and hypotheses, not a call to action. It is up to you to rely on our thoughts or not..

And what about the author's predictions

Research, for example this and this, talk about, that the accuracy of target price predictions is low. And that's ok: there are always too many surprises on the stock exchange and accurate forecasts are rarely realized. If the situation were reversed, then funds based on computer algorithms would perform better than people, but alas, they work worse.

Therefore, we do not try to build complex models.. The profit forecast in the article is the author's expectations. We indicate this forecast as a guideline. As with the investment in general, readers decide for themselves, it is worth trusting the author and focusing on the forecast or not.

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What the company makes money on

It is a network of ecological farms, where vegetables and fruits are grown using artificial intelligence, machine learning and robots. A detailed analysis of the company's work can be found in the review, so we will not repeat ourselves here.

The company's business has not yet left the startup stage: total revenue in 2021 is $5.9 million. The company is wildly unprofitable.: its loss for the same period amounted to 77.799 million.

Generally, startup as it is.

Arguments in favor of the company

Fell down. The company's shares have fallen sharply this year from a historic peak. 35,7 $ in February to 5,09 $. Now they are almost two times cheaper than the price of accommodation — 10 $. I think, we are given a good opportunity to take shares with the expectation of a rebound.

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Price. In absolute numbers, the company is very inexpensive.: its capitalization is 512.55 million dollars. This will make AppHarvest shares quite mobile due to the influence of the factors described below.

«Cloning, occultism, black magic". I think, that retail investors will massively take the word for AI, robots and other "brave new world" and pump up the company's shares, because "this is the future of agriculture". But in addition to them, the company's quotes may well be supported by serious institutional investors., interested in the transformation of the US agricultural economy.

The American agricultural sector was, is and, if nothing changes, will depend on the pool of cheap labor from illegal migrants, which are from 50 to 75% all employees on American farms. We are talking about illegal immigrants, who can only work in the lowest-skilled and lowest-paid jobs available in the U.S., where state surveillance is not as strong, as in other areas. Illegal immigrants from agriculture were not expelled even during the period of coronacrisis restrictions, declaring them critical workers.

But the eternal pandemic still imposes serious restrictions on the movement of large numbers of people.. And without a pandemic, count on that, that Latin America will forever supply the U.S. labor market with enough people willing to work for a pittance., desperate poor, also not worth it. Therefore, the robotization of agriculture in America began under Trump.. This area is amenable to robotization with great difficulty., since investments in this area will not begin to pay for themselves soon..

About the same, by the way, it was also with electric cars. To make money go into the technological transformation of agriculture, we need to support startups, working in this field, — how major investors and supported Tesla, to motivate the major automotive industry to invest in the electrification of vehicles.

So there is reason to calculate, that AppHarvest quotes will pump up despite the lack of a solid economic foundation for this company – just to create the image of a "profitable" enterprise and facilitate the flow of money to similar companies.

Can buy. Low price and desire to experiment with robotization may well lead some large agricultural holding to the idea of buying AppHarvest. Fortunately, high food prices contribute to this.: i would expect, that agricultural holdings will decide to invest part of their super-profits in technological experiments, to strengthen your business in the face of risk, related to the potential decline in the availability of illegal workers.

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What can get in the way

The economic foundation is weak. Agriculture is very difficult to robotize largely due to the volatility of prices for products in this sector.. Cheap labor for agriculture is one way to balance the risks of falling product prices.. AppHarvest's default way of doing business is less profitable, than conventional farms.

So there's nothing surprising about, that the company does not even fit into its own revenue plans. But investors do not make a discount on the specifics of agriculture and react to this news very painfully.. Even worse: here you should not expect a rapid growth in the financial performance of AppHarvest. All factors in favor of these stocks are purely speculative.

Does not contribute to the growth of quotations and unprofitability of the company: next year FED raises the stakes, which will greatly complicate the company to obtain a loan. Considering this, she will be motivated to deal with the additional issue of shares, what quotes can suffer from, if there is not enough demand for its shares.

So AppHarvest shares will be stormy – you need to be ready for this. In general, the company looks like a raw startup - so it may well go bankrupt in six months..

Red Notice. AppHarvest went public by merging with SPAC. SPAC often hides a lot of unpleasant things in itself., so with AppHarvest there are risks, that everything will end with the delisting and closure of the company. Moreover, it is already known about the claims of investors, related to the deception of shareholders: the company lowered revenue expectations too much, which raises doubts about the honesty of its leaders, which could warn future shareholders of such risks.

maybe, in the future, investors are waiting for other unpleasant revelations, which can drag quotes into hell.

What is the bottom line

We take shares now by 5,15 $. And then there are several options.:

  1. think, over the next 2 year we can wait for the growth of the value of shares to 7 $, who asked for them back in September 2021;
  2. You can hold the following shares 7 years, to wait for the price 20 $;
  3. you can finally get naked and hold the following stocks 20 years, to see, how they will return to the historical maximum 35 $.
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But it should be understood, that this idea is wildly volatile and speculative — like all startup investment ideas. All factors in favor of AppHarvest shares are purely speculative, there is no economic foundation for this idea.: the company is not yet a more or less working business. It's an experiment in the form of an exchange-traded company..

Therefore, treat this idea accordingly and invest only that money in these stocks., which would otherwise have been burned in a furnace.

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