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They are all apart of the Appharvest vision! 😎
To start, I am a devout follower of the company Appharvest ($APPH) 🙏😇. I’ve done a couple DDs on the company, and A LOT has happened since my last DD. They’ve had their first earnings report. They’ve announced the construction of new farms. They’ve started expanding into other crops besides just tomatoes. And most importantly, which I will get to, they acquired a robotics company called Root.AI and will leverage their experience to build Project TalOS.
I firmly believe in the mission of $APPH and there’s no doubt in my mind that $APPH will take me (and possibly you) to the promised land.
$APPH is one of the few publicly traded indoor farming companies in the world. To borrow some big words from le sophisticated, these companies are involved in what is called CEA (Controlled Environment Agriculture). However, you don’t have to be sophisticated to realize that (with global warming, supply shocks due to pandemics, food shortages, increasing population growth, depleting resources, and inflation) that CEAs are the future! Just take a look at California and other states out west and the current drought conditions. It’s only a matter of time before farming outdoors for many crops becomes impractical. Indoor farming companies like $APPH are the future because they require 90% less water than conventional farms. Being inside, they are also insulated from weather and are exposed to less pests, meaning crops can be grown year round and with little to no use of pesticides. $APPH is strategically headquartered in Kentucky where rains have only been increasing in recent years.
Honestly, there’s so much to talk about this company and industry, I will probably have to produce a FAQ one day if there’s enough interest. However, what I want to focus on with this DD, is, well what’s new?
Since my last DD, the following has occurred.
In April of this year, Appharvest bought Root.AI which is an artificial intelligence and robotics company. This acquisition enhanced $APPH’s ability to monitor crop growth using algorithms and pick crops using robots. While this in itself is pretty cool, (having say Jarvis pick your tomatoes when they are ripe) from a 💰💰💰 standpoint it is just ok. (Btw their robot now is called Virgo not Jarvis in case you were curious.) Sure you reduce some costs but that’s about it and as of now, $APPH has no plans to manufacture and sell these robots.
Now, I’m not an expert of the food industry, but I’d imagine most of the industry is low margin, meaning you aren’t making a ton of money from each sale. You just hope to make a lot of sales. This is similar to another industry with a company I follow, Carvana, a used car dealer. Buying and selling used cars is a low margin business, so there needs to be additional revenue streams if you truly want to make it big. Turns out, the bulk of the money Carvana makes comes from financing as well as from selling additional products like GAP insurance, NOT from flipping cars.
The leadership at $APPH probably realizes this as well. They can’t be an agg-tech company if all they do is sell crops. Sure, $APPH has goals to become the largest CEA in the US, but these guys have even bigger dreams. They, like Carvana, plan on creating additional revenue streams, which could turn what is traditionally a low margin business into a high margin one. One additional revenue stream they are looking into is creating the industry standard Operating System of the CEA world. (Think Amazon, Microsoft, Apple, Google, type stuff… but for Aggtech)
As of now, there currently is no good OS for running CEAs, which is what led $APPH to create its own OS called Project TalOS. The vision is for this software to integrate robotics, genetics, management software, and AI. In other words, they plan to create the software that oversees and optimizes production through controlling every aspect of crop growth. Ultimately $APPH plans to make the food supply chain hyper efficient like the e-commerce supply chain, which Amazon revolutionized.
So is there a market for this? I’m no smarty, but the answer is DUH!!! I’m willing to bet that more and more crop production will be moved indoors. Additionally, don’t forget about the recent boom in marijuana, which will require some sort of software to manage their crops. Also, there have been other indoor farming companies popping up here/there. For example, a competitor of $APPH, Aerofarms, is looking to build a farm in the Middle East. In door farming is the future, and as these farms get more sophisticated, at some point they need some lines of code to make everything work together. And $APPH plans to make bags off of this. (Side note: Pls don't be a boomer and think farming should only occur outdoors. I know last time I posted, there were some boomers hating on CEAs. Just remember boomers don't like change or bags.)
With that said, do I believe that the OS developed by $APPH will be able to be the dominant OS in the CEA space? I can’t say for certain, given that it’s such a new thing and in a growing industry. But the fact that they are attempting to do so and given their past track record of execution gives me confidence that they will at the very least make very good progress. Remember, these guys were able to build their first farm in 2020 during the heights of Covid-19 and are on-track to build out a total of 12 farms by 2025. $APPH also always seems to be ahead of the curve, like locking in glass and steel prices before the current inflation. While other companies are just beginning to build farms, these guys are already building the operating system that those farms will use.
I love $APPH. I hope to see yall there with me. 🙏🙏🚀🌕
Disclosure: I am long $APPH. Opinions and statements regarding the financial markets are based on current market conditions and constitute my judgment. They are subject to change without notice. My bullish sentiment is my opinion and was reached after doing intensive due diligence on the industry and company.
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