Smartphones
Unlock a World of Investing with a Magnifi Account
Smartphones have changed the fabric of our lives. From instant news updates, to social media, to checking our phones countless times each day out of habit— they have changed how we think, how we interact, and how we meet our needs (from getting groceries to finding directions to meeting our future mate).
In 2020, the global smartphone market was valued at $714.96 billion. It is expected to surpass $1 trillion by 2026. While it is expected that the market will plateau because of sheer penetration, mobile technology isn’t done yet. From a wide rollout of 5G to foldable phones, the world of smartphones has new opportunities on the horizon.
Interestingly, the pandemic of 2020 increased the demand on cellular networks. According to Ericsson, the number of mobile 5G subscriptions in North America will reach 325 million. That’s compared to 3 million in 2019.
In other words, it accelerated the need for digital connectedness, making smartphones more vital than ever.
What Is a Smartphone?
A smartphone is “a mobile phone that performs many of the functions of a computer, typically having a touchscreen interface, internet access, and an operating system capable of running downloaded applications,” according to the Oxford dictionary.
While the iPhone launched in 2007, the iPhone didn’t change the world on its own. The first iPhones cost between $399 and $599, which at the time was a large premium.
Androids played an important role in bringing the price of smartphones down. In 2008, after the launch of the iPhone, HTC’s T-Mobile G1 launched for a price tag of $179. This price drop, in conjunction with other factors (including a data price drop, better apps, and better camera technology), helped to make smartphones more accessible and ubiquitous globally.
Today, 91 percent of US households own smartphones and use them a lot. Approximately half of web traffic worldwide is mobile, in fact. In the third quarter of 2020, alone, mobile devices (not including tablets) generated 50.81 percent of global website traffic.
Worldwide, there are more than three billion smartphone users. That number is predicted to grow by several hundred million in the next few years. With more than 100 million users each, China, India, and the US are home to the highest number of smartphone users.
Why Invest in Smartphones?
While it might seem that the smartphone market is tapped, lots of growth potential exists.
First, investing in smartphones isn’t limited to investing in Apple shares. Today, the leading smartphone companies include Samsung, Apple, and Huawei Technologies. These three technology companies sell about half of all smartphones worldwide. While all three shipped at least 200 million smartphones in 2018, Samsung outsold the other two competitors, selling more than 290 million smartphones. Other smartphone makers include Google, LG, Motorola, Vivo Communication and Xiaomi.
Networks are also getting better by going 5G, and that takes equipment.
5G chip makers include Qorvo, whose “revenue for the third quarter of fiscal 2021 increased 26 percent year over year to nearly $1.1 billion.” Its shares nearly doubled, from $1.86 per share a year ago to $3.08 per share at the end of the year. The company expects that 2021 might be an even better year, estimating that 500 million 5G smartphones could be sold in 2021, compared to just 250 million units in 2020.
Chips are required in almost anything powered by software (including smartphones, cars, laptops, PCs, video games and data centers), and they are seeing more demand than ever. Alternatively, instead of choosing a particular chip company, semiconductor ETFs are also available.
Beyond new networks, cellphones themselves aren’t done innovating just yet.
These days, foldable phones are on the horizon. Foldable phones can adjust their size to meet the user’s need—making it larger to function more like a tablet, or smaller to function more like a mobile phone.
While foldables are on the market (Royole introduced the first foldable phone, the FlexPai, in October 2018, and Samsung has since released three, and Motorola recently released one), they haven’t arrived or been adopted in full force.
And, what would our phones be without the apps we rely on?
Google’s Play Store is home to nearly 3 million apps and Apple’s App Store is home to nearly 2 million apps. Consumer spending on app stores on these two platforms and third-party app stores hit $143 billion in 2020. The dating app Tinder alone grossed $33.86 million and the gaming app Monster Strike grossed $28.92 million. That’s a lot of revenue generated by tiny little display squares.
Beyond gaming and dating, finance and communication apps (for platforms like Zoom) are growing too. Investors aren’t missing the boat. Between 2016 and 2020, global funding to mobile technology companies more than doubled compared to the previous five years.
Unlock a World of Investing with a Magnifi Account
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the March 16 ,2021 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Toys
Unlock a World of Investing with a Magnifi Investment Account
While as adults we might have a strong sense of nostalgia about walking through a toy store lined with aisles of flashy boxes, from an industry perspective, the efficiency and accessibility of e-commerce has become a much more powerful sales tool.
This is especially true since the stay-at-home orders and social distancing guidance of the pandemic, which has parents and children held-up at home missing out on the fun parks, zoos, museums, and other forms of family entertainment.
And so, it shouldn’t be surprising that in 2020, toys sales were up… big time.
While toy sales typically spike around the holidays, toy sales were up across the board all of last year. In fact, the toy industry grew 19% in the first three quarters of the year, according to NPD Group. Families, stuck at home, still wanted to spur their children’s creativity and curiosity, and they spent money on toys to do just that.
So, what toys are parents buying to keep their kids (and maybe even themselves) busy? People are buying a lot of puzzles, plus on action figures, plush toys, sports equipment, building sets, and preschool products. For Lego alone, sales increased 14 percent in the first half of 2020 compared to the same period in 2019, even as many stores closed around the world.
The toys market is forecasted to exceed $120 billion in revenue by 2023. Here’s what investors should know about the industry.
What Are the Trends in the Toy Industry?
The toy industry uptick is in large part thanks to the increased adoption of e-commerce. As a result of COVID-19, consumer preferences— even among older generations who tend to be slower to adopt new technologies— shifted from face-to-face to online. Three in four buyers and sellers now prefer digital options over in-person sales because of safety, speed, and convenience. In the third quarter of 2020 alone, e-commerce sales jumped 37.1 percent from the third quarter of 2019.
Tied to the rise in e-commerce and the greater demand for reduced waste, toy packaging is becoming less eye-grabbing and more sustainable. After all, there is less need for toys to stand out on a toy store shelf these days.
According to Nasdaq, in the first three quarters of 2020, leading toys included L.O.L. Surprise!, Barbie, Star Wars, Marvel Universe, Pokémon, Disney Frozen, Nerf, Hot Wheels, Little Tikes, and Paw Patrol.
Video games also performed well, with Nintendo and Activision Blizzard both reporting record sales. In just the holiday quarter of 2020, Nintendo sold more than 11.57 million Switch consoles, adding up to nearly 80 million consoles sold since the Switch’s 2017 launch. Consumer spending on video content is on the rise, in part thanks to virtual reality products, mobile gaming, and a rise in competition.
Another trend is the rise in toy subscriptions services for kids. From educational toys to project-based crafts, more and more boxes of curated toy-products are arriving monthly via the mail for children. Many subscription-based toys (as will all toys) are increasingly personalized and STEM (science, technology, engineering and math) oriented.
Another trend is that toys are becoming more diverse and geared towards encouraging inclusion. In 2020, Crayola released a new pack of crayons called “Colors of the World” to reflect the diversity of skin tones around the world. In 2020, Barbie also got a makeover, with a newly launched group of Barbie dolls that includes a Barbie with no hair and a prosthetic limb. Toy companies are moving more and more to celebrate differences, rather than ignore them.
Why Invest in the Toy Industry?
Parents are spending more than ever on toys, in part because of “COVID-guilt.” Parents are willing to spend more as their kids miss out on experiences like birthday parties, as well as “normal” in-person school interaction and experiences with their peers.
In other words, what might have been considered discretionary spending in a “normal” year now feels—to many parents— like necessary spending.
According to the Children Toys Market 2021 Global Industry Research Report, “toys are the backbone for children to turn their mental processes such as imagination and thinking into behaviors. Children’s toys can develop athletic ability, train perception, stimulate imagination, evoke curiosity, and provide material conditions for children’s physical and mental development.”
Many parents agree and as such, are willing to spend money on everything from pricey building sets to monthly project boxes to keep their children’s minds growing.
Unlock a World of Investing with a Magnifi Investment Account
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the March 2, 2021 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer or custodial services.
Pets
Unlock a World of Investing with a Magnifi Investment Account
We call them our fur babies, we treat them like humans, and we don’t hesitate to spend money on them. The “humanization of pets” trend is real— and likely, many of us can relate. According to Packaged Facts, 56 percent of US households have pets. 40 percent of those households have dogs, which reflects an exponential rise in dog ownership over the past decade.
In a normal year, Americans adopt 3.2 million shelter animals. That was before the pandemic, which didn’t stifle all industries like it did travel and entertainment. Far from it. As the world shifted into a COVID-19 driven lockdown, people looked to add pets to their lives. More than 3.3 million pets found homes in 2020, according to Petco. That represents an increase of 4 percent in 2020, translating to $4 billion in incremental annual demand, according to Packaged Facts.
The pet industry is booming in the pandemic world. Here’s what investors should know.
What Does the Pet Industry Include?
In 2019, Americans spent $95.7 billion on their pets. In 2020, it is estimated that Americans spent $99 billion, according to the American Pet Products Association. Taking care of pets requires pet food, treats, supplies, medicines, veterinary care, and services including boarding, grooming, insurance, training, pet sitting and walking.
According to Petco, the US pet care industry serves 72 million households. And while the US is home to many dog and cat lovers, pets include other animals, such as birds, lizards, fish, and hamsters, amongst others.
Why Invest in the Pet Industry?
Even before the pandemic, pet ownership was on the rise. Part of that was driven by Baby Boomers, who control over 53 percentof the country’s wealth. According to Packaged Facts, pet ownership among Baby Boomers increased from 50 percent to 54 percent between 2008 and 2018. This growth was in part attributed to Baby Boomers having more time at home, becoming empty nesters, etc.
Then the pandemic hit, and we all found ourselves with a lot more time at home. And lots of us added pets to our families.
This increased demand for pets spurred the pet industry.
In January 2021, Petco Health and Wellness hit the market with a bang, closing up more than 63 percent. In an interview with MarketWatch, Petco’s Chief Executive Ron Coughlin explained why: “People are home for COVID, they’re a little depressed, and they want that bundle of joy.”
The pandemic has not only shown how resilient the pet industry is, but also how much our pets mean to us.
According to Rachael Silverman, a psychologist specializing in couple and family psychology, in an interview with TIME magazine, “With so much uncertainty and instability, animals provide people, especially children, with unconditional love, support, and comfort as well as serve as a distraction.”
These strong sentiments help to explain why, these days, the average pet lover won’t just settle for any pet products and services. They order subscription boxes to delight their pup, upgrade to organic foods, and shop specialty toys and treats. Hence, pet companies big, small, and creative are seeing increased consumer demand.
The Farmer’s Dog, for example, makes fresh and personalized meals for dogs. It raised $39 million in 2019, the largest Series B round for a pet startup. Barkbox, a subscription service for dogs, merged with blank-check company Northern Star Acquisition Corp in December 2020. The deal reportedly valued BarkBox at $1.6 billion, and will result in BarkBox going public. Online retailer Chewy also saw enormous growth in 2020. The company’s active customers grew 39.8 percent year-over-year to 17.8 million and customer spending was up as well, growing 2.8 percent from a year ago and now averaging $363 per year.
According to the 2017-2018 National Pet Owners Survey from the American Pet Products Association, 28 percent of dog owners surveyed indicated that they celebrate birthday parties for their dogs. We can take a wild guess that that number will be higher in 2021… and that means a lot of pet owners will be shelling out for dog birthday cake.
Pet expenses are here to stay once you add a pet to your family, and so it’s safe to say that with so much demand for pets this past year, the pet industry demands won’t be going away anytime soon. All of these pets purchased or adopted in 2020 will require care, vaccines, medicines, supplies, toys, and treats for years to come.
Perhaps not surprisingly, just like the world of health and wellness for humans, there are innovators in the pet health space, as well. The 2021 Purina Pet Care Innovation Prize Winners include Denver-based ClueJay, an online diagnostic platform for pets and their vets; Minnesota-based Kitty Sift, which offers a litter box made from 100 percent post-consumer recycled cardboard; A Pup Above, which makes fresh dog food with more protein; and Mella Pet Care, which tracks pet health.
While not every year will be a pandemic year for pets, there is no arguing that people love their pets. There is a reason that pets are a $100B+ industry in the U.S. alone.
Unlock a World of Investing with a Magnifi Investment Account
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the February 23, 2021 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer or custodial services.
eSports
Unlock a World of Investing with a Magnifi Account
The last 12 months have been challenging for the sports industry. Canceled seasons, empty stadiums and ever-changing schedules for many leagues in 2020.
It has become the perfect growth opportunity for eSports, aka video game competitions.
Even before the pandemic, eSports was a growing industry which saw $4.5 billion in investment in 2918, according to Deloitte. That’s a notable increase from $490 million in total investment in 2017. And it’s still just beginning. According to a Newzoo figure on Statista, eSports industry revenue is expected to reach $1.6 billion by 2023.
More traditional “sports” genre varieties of eSports that are growing in popularity include eNascar sim racers (which set a new record in March 2020 to become the highest-rated televised eSports event ever), the FIFAe World Cup, and the NBA 2K League, whose broadcasts on Twitch increased nearly 70% year over year. That’s not to mention the Madden 21 Club Championship which is scheduled to return in 2021 with a prize pool of $750,000.
According to the eSports Industry Report by Pillsbury, year-over-year eSports industry growth is expected to reach 26.7% this year and traditional leagues are taking notice. But e-versions of traditional sports aren’t the only kinds of eSports, which also offer more traditional gaming competitions.
What Are eSports?
As a category, eSports is basically “competitive gaming at a professional level.” To be sure, however, they look a lot different than traditional sports.
The many genres of eSports include Real-Time Strategy, Multi-player Online Battle Arena (MOBA), First-Person Shooter (FPS), and Sports. Across genres, eSports don’t involve physical activity like sports in the traditional sense (although some eSports teams have personal trainers that help players to stay fit). It’s video gaming.
Even so, pro-gaming is serious business, with gamers practicing for 10 hours or more each day. Like more traditional sporting “practice,” activities might include studying previously completed games to determine ways to improve, informal competitions against other teams, and even analyzing opponents’ play styles and strategies. Pro teams even have coaches and managers.
Typically, professional gamers are paid a base salary by their team or company before bonuses or prize winnings. eSports teams make money through sponsorships, advertising, merchandise, tournament winnings, league revenue sharing, ticket sales, and broadcasting rights. Top tournaments and leagues beyond ones that resemble traditional sports include the Overwatch League, League of Legends Championship Series, Fortnite World Cup, and Dota 2: The International.
A major difference between traditional sports and the eSports industry is that the games played in eSports are owned by their game/developers and publishers. Publishers are considered “the most powerful group in the eSports ecosystem,” according to Pillsbury. Even if a publisher isn’t handling a tournament, it can still generate licensing revenue.
Tournament organizers can also make large sums of money, even if they license from game publishers. The Electronic Sports League (ESL), for example, is one of the world’s largest eSports companies.
So, who is watching? It’s a young and well-off demographic.
According to Deloitte, “the eSports industry had a global fan base of 380 million in 2018 with 37% representing males ages 21 to 35, and 16% representing females ages 21 to 35.” In the United States, 61% of eSports viewers earn more than $50,000 per year.
Viewers aren’t limited geographically to the U.S. Nearly half a billion people worldwide consume eSports content, and most of those audience members are under the age of 35—one of the most important and profitable demographics for brand awareness. In China, South Korea, and Europe as well as in the U.S. competitive gaming has established mass popularity. Its popularity is also growing in Eastern Europe and South America. That’s much different than the markets for traditional sports (think NFL football) that are predominately tied to domestic audiences.
Why Invest in eSports?
If there’s any indication about the future of eSports, it’s the acknowledgement from the broader sports world that this segment of the industry is here to stay. ESPN, for example, broadcast League of Legends, NBA 2K, and Formula 1 in 2020. Not only did that catch the eyes of its followers, but it also introduced new viewers to the eSports category.
According to Deloitte, “the eSports ecosystem offers a variety of different investment opportunities across a range of subsectors.” These include team organizations, developers, event coordinators, media, eSports viewership platforms and advertising, and consumer products.
Viewership platform Twitch, for example, is owned by Amazon and streams a massive portion of eSports events. In November 2020, Twitch reported a record 1.7 billion hours watched. And Twitch isn’t alone. According to Riot Games, League of Legends Worlds 2020 also set a new record, achieving an average minute audience of 23 million. Other streaming platforms include Huya and Douyu, two of the largest streaming platforms in China.
With more than 2.5 billion gamers around the world, the eSports industry has an “unparalleled potential for growth” especially in a pandemic and post-pandemic world. And, with the diversity of stakeholders involved, there is ample opportunity for investment.
Unlock a World of Investing
with a Magnifi Account
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the January 7, 2021 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Wearables
Unlock a World of Investing with a Magnifi Account
How many steps have you gotten today? For many of us, that question might cause us to automatically glance at our wrists.
Smart watches, fitness trackers, high-tech clothing, glasses, and more— wearables have gone from a futuristic idea for health and wellness to the new normal.
While the big names including FitBit, Apple Watch, and Samsung lead the way, they aren’t the only players in the market.
WHOOP, for example, is a Boston-based digital fitness company that closed a $100 million Series E financing round in late October. Whoop, a sponsor of many athletes across sports, is designed to help athletes determine whether they need to rest or push themselves. The company is now valued at $1.2 billion, giving it unicorn status.
From sleep monitoring to calorie tracking and beyond, more and more people are opting to wear devices that collect health data and metrics and connect to each other.
These devices are advancing fast from simply counting steps. Apple’s Apple Watch, for example, enables users to perform an electrocardiogram heart reading. Matrix PowerWatch Series 2 can charge itself from solar power or body heat, instead of electricity.
Here’s what investors need to know about the current state of the wearable market and what its potential looks like.
What Are Wearables?
While wearables might seem new, they aren’t even a 21st century idea.
It’s thought that Leonardo da Vinci developed the first pedometer in the 15th century as a means to track the distance a soldier walked. Later, in the 18th century, Thomas Jefferson created the first pedometer in the US and introduced it to the American public. Beyond pedometers, most believe that a tiny abacus worn as a ring in the 17th century in China is the world’s oldest smartwatch of sorts.
These days, modern wearable technology quantifies human movement and records physiological metrics. Diagnostic wearable medical devices “monitor, control, and track an individual’s vital signs at regular intervals.” Different wearables measure different physiological information, including blood pressure, body temperature, respiratory rate, glucose quantity, heart rate, blood oxygen saturation, heart rate, muscle activity, or calories burned during exercise. These devices typically work autonomously and come in a variety of forms.
When did wearables get so popular, again? FitBit launched its first device in 2009, a wireless device that clipped onto clothing. The first model wasn’t smartphone connected. And while 2012 models linked directly to smartphones, it wasn’t until 2013 that FitBit released a wrist worn tracker. In 2015, FitBit sold 21.4 million devices and in 2016, it sold 22.3 million devices.
That’s not to mention smartwatches, which are technically wearable computers. Apple, Samsung, and FitBit dominate the smartwatch market today, which is anticipated to reach a market value of $130.55 billion by 2024 from $48.14 billion in 2018, indicating significant growth.
Wearables are getting smarter and smaller. Smart jewelry, as of 2020, includes the smart ring by OURA. A company named Joule is even working on a smart earing backing. Larger pieces have advantages, however. Smart clothing, for example, covers a larger area of the body and so can detect even more information. For example, Samsung has a patent for a shirt that can detect breathing issues and lung disease.
Another type of wearable, called “hearables,” is on the rise too.
According to Scotland’s National Health Service (NHS), “devices that are primarily intended to allow streaming of media to the device but that also offer a hearing enhancing function not dissimilar to a hearing aid.” The hearables market is estimated to grow to a $93 billion dollar market by 2026.
But wearables aren’t just… worn.
For instance, the first ingestible digital health feedback system, developed by Proteus Digital Health, was approved by the FDA in 2012. Wearables come in many shapes and sizes, and have an increasing number of uses and potential uses (and users).
Why Invest in Wearables?
In a world dealing with obesity and other chronic health conditions, wearables have the potential to shift medicine from the intervention stage to prevention.
According to the Centers for Disease Control and Prevention (CDC), 6 in 10 adults in the US have a chronic disease, such as heart disease, cancer, chronic lung disease, stroke, Alzheimer’s disease, diabetes, or chronic kidney disease. Lifestyle choices that influence chronic disease include tobacco use, poor nutrition, lack of physical activity, and excessive alcohol use.
That’s where wearables come in. By tracking personal habits, the user is able to make changes before things get out of hand.
While wearables are wildly popular, they have yet to tap the potential in the world of remote medicine. In fact, although remote monitoring tools have enormous potential for patients with chronic illnesses, they remain vastly underused. Case in point: “ninety-one percent of the patients who use wearables identify as an athlete, compared to the only 21 percent who said they have a chronic illness.” Nonetheless, wearable technology is a promising tool in the fight against chronic disease.
Wearables offer a myriad of potential health solutions, from monitoring key health indicators to minimizing touch on shared surfaces. Wearables can open doors in office buildings, for example. Wearables can also monitor and flag changes in body temperature. Over time, wearables can determine trends and track performance, offering increasingly personalized feedback and training opportunities.
Increased adoption of wearable devices and market potential in medicine make wearables a worthy investment.
FitBit has close to 500,000 subscribers to FitBit Premium, with the pandemic strengthening business as consumers seek ways to stay healthier from home. As part of its growth plan, FitBit plans to continue to promote subscriptions that foster engagement, as well as develop telemedicine potential. For example, the company may promote add-on devices such as a connected thermometer or an otoscope that can lessen the need for in-person doctor visits. It’s also conducting research to determine how effective the technology can be in detecting COVID-19 early.
Apple also has its eye on health, specifically monitoring key indicators in senior citizens.
The wearable market isn’t expected to slow down anytime soon. While wearables have shown significant growth thus far, they have loads of potential, especially as it relates to increasing integration with healthcare in a world riddled with chronic disease and reeling from a pandemic.
Unlock a World of Investing with a Magnifi Account
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the November 17, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Drones
Unlock a World of Investing with a Magnifi Account
Pick a beach, park or other open area, and you might get the impression that flying drones seem to have replaced flying kites. While this is partly true, the depth and breadth of the applications of drone technology go far beyond recreation to an advancing and growing market of military and commercial uses.
From agriculture and environmental monitoring, to law enforcement and delivery services, drones are improving and expanding the efficiency and accuracy of research and commercial projects around the world in a myriad of ways.
More and more, companies are realizing this and investing in new drone technologies. According to the Federal Aviation Administration’s 2019 Aerospace Forecast, the FAA expects the commercial drone market to triple by 2023. According to a market report published in September 2020, the global Commercial Drone market size is projected to reach $34 billion by 2026, a considerable jump from the $6 billion it racked up in 2020.
Here’s what investors should know about drone technology and their market potential.
What Are Drones?
Drones, the more common name for Unmanned Aerial Vehicles (UAVs), are unpiloted aircraft or spacecraft. They vary in shape, size, and use. For example, some drones require a human operator, but some do not. Some drones are so small they can fit in your hand, while some are as large as traditional aircraft.
There are three standard types of drones, including Single Rotor Helicopters, Multi-Rotor Drones, and Fixed Wing Drones. Single Rotor Helicopters look like small helicopters, and they are often used to transport heavy objects, survey land, and gather data. Multi-Rotor Drones are small and often used for photography or hobby-flying. Fixed-wing drones look like normal airplanes and run on fuel rather than electricity, allowing them to run for much longer.
While drone applicability is expanding in the modern world in tandem with advancing drone technology, the notion of utilizing unpiloted aircraft isn’t a new one. Drones were first used in the mid-1800s when in 1849, Austria launched a balloon bomb attack on Venice. By WWII, technology had advanced to models like Austrian Jindivik, a pilotless target aircraft.
It’s not surprising that drone technology has been advanced by militaries around the world for many years. This is in part because drones offer a range of military uses, from reconnaissance that doesn’t necessitate putting a pilot’s life at risk to offensive strikes in hard-to-reach areas. Drones also don’t require rest like their human counterparts, just enough fuel or battery power to fulfill their mission.
Drones are also playing an important role in advancing our knowledge of space. NASA’s Dragonfly mission will use a drone to sample and examine sites around Saturn’s icy moon beginning in 2026. This will be the second outer space drone mission, following the launch of a small helicopter scout as part of NASA’s Mars 2020 rover mission, expected to land in February 2021.These advanced outer space missions are not to mention that in 2019, X-37B an astronaut-free spacecraft that has clocked as many as 719 days in continuous low-earth orbit. X-37B is a reusable spacecraft that has taken five missions since 2010.
Somewhat surprisingly, it wasn’t until 2006 that non-military, commercial applications of drones began. Then, suddenly, their uses expanded to functions from pipeline inspections to crop evaluation to security and beyond.
Why Invest in Drones?
In the modern world, the application of drones is exploding. And, it’s playing a role in not only the advancement of science and industry, but also real-world geopolitics.
In the ongoing conflict between Azerbaijan and Armenia over the region of Nagorno-Karabakh, for example, drones are a contentious weapon. In early October 2020, Canada boldly “suspended the sale of advanced drone optics to Turkey over allegations that the technology is being used in the conflict” to support Azerbaijan. At the end of October 2020, Armenia called for more Western nations to do the same.
In Malaysia, the state of Selangor is planning drones to patrol waterways for polluters day and night, a prevalent issue that plagues the country.
In China, the use of agricultural drones has seen a dramatic uptick, improving farming efficiency. Chinese agricultural drones can cover more than 50 to 60 times the amount of farmland that more traditional manual farm work can.
In the U.S. poultry industry, drones and robots are expected to play an increasing role in more efficient production. For example, drones can be used to spot dead birds, or even monitor the gait of birds to detect illness. Likewise, drones have the potential to administer aerosol vaccines. These applications are particularly promising considering that producers can purchase quality drones starting at only $500.
And let’s not forget about the drone delivery of online purchases we’ve all been waiting for.
In September 2020, Amazon.com Inc. received approval from the Federal Aviation Administration to “establish a fleet of drones” and begin testing drone deliveries. It follows companies including Uber Technologies Inc., Wing (of Google’s parent company Alphabet), and UPS. This is a long-awaited step forward after Amazon’s first announcement that it would pursue drones for delivery in 2013.
Behind all these advances (and many more) there are numerous companies developing, manufacturing, and selling this in-demand technology. So, while the hobby-drones that we see at the park are indeed a multi-billion-dollar industry, they are the tip of an iceberg of opportunity for investors with an eye towards the future.
How to Invest in Drones
From military and defense applications, to surveying and data collection, drones are everywhere these days. That can make it challenging for investors who want to get into the space; there are just so many options out there to consider.
However, there are a number of mutual funds and ETFs that give investors access to the drone industry without having to focus on any particular companies. A search on Magnifi suggests that investors have a number of choices in this fast-growing industry.
Unlock a World of Investing
with a Magnifi Account
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the November 11, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.