Marketing Report
[Column] Michiel Frackers: Musk and Zuckerberg are switching roles and BlackRock is making a big push in decarbonization

[Column] Michiel Frackers: Musk and Zuckerberg are switching roles and BlackRock is making a big push in decarbonization

What conservative investors think investing in climate technology looks like.

Elon Musk had a fantastic week and Mark Zuckerberg saw two hundred billion in stock market value evaporate, because shareholders have doubts about his billion-dollar investments in AI. The costs are high and the possible returns are still completely unclear as Meta AI, powered by their latest language model Llama 3, is offered free and open source.

The sentiment that returns are unclear was also often heard about investments in  climate tech , yet the world's largest investor BlackRock and Singaporean sovereign wealth fund Temasek are investing heavily in this crucial sector through a new fund:  Decarbonization Partners .

I would like to meet anyone who is considering investing in the rapidly developing sector of climate tech and decarbonization in May when I am in the Netherlands and Singapore. But first: the surprising week of Elon Musk and Mark Zuckerberg.

After 52 editions, the time has come: Tesla is the best-scoring share of the week.  How?

Musk wins despite glue on accelerator

This week, as is often the case in the tech sector, was a story of two extremes: Tesla rose enormously, while Meta plummeted. This is especially striking because the Tesla share had fallen from an all-time high of $409 to $138, while Meta was one of the biggest risers on the stock market in the past year. What happened?

After recalling all Tesla Cybertrucks sold due to possibly  glued accelerator pedals  and confusing  stories about robotaxis  that were met with deafening silence from investors, Tesla hid   this sentence at the bottom of page ten of the quarterly report :

“We have updated our future vehicle offering to accelerate the launch of new models ahead of the previously communicated start of production in the second half of 2025.”

In other words: Tesla's long-awaited Model 2, the cheapest Tesla ever, which will become the Tesla Golf, will come onto the market earlier than expected. The TSLA share promptly rose by 12 percent.

Meanwhile, Musk's intended opponent in a cage fight  between what would have been the two palest fighters in combat sports history, Meta's Mark Zuckerberg, had one of those moments where your confidence overwhelms your reason. 

Zuckerberg punished for honesty

During the presentation of Meta's quarterly figures, Zuckerberg revealed that it  will take a number of years "  before investments in AI will translate into profits. Zuckerberg truthfully added that once Meta finds a revenue model, it is very good at monetizing it.

Only no one heard it anymore, much like when the drinks and snacks run out at a party and then the sound system goes out, but the host cheerfully suggests that we could all sing some psalms together. The result: a collapse of Meta shares by 16 percent and a  loss of two hundred billion dollars  in market value.

Since 2020, Meta has lost no less than forty-five billion dollars through its Reality Labs department on investments in smart glasses and non-existent Metaverse trading. No shareholder is expecting Zuckerberg to lose that kind of money on his investments in AI, while the ordinary advertising business is now doing fantastically: mainly because the Chinese discounters Temu and Shein advertise for billions via Facebook and Instagram, advertising turnover increased in the first quarter by 27 percent to more than 35 billion dollars.

Shareholders think about today, investors about tomorrow

Shareholders would rather receive dividends than invest. Google owner Alphabet became  worth two trillion dollars (two thousand billion) this week after it announced it would pay a dividend of  twenty cents per share   and buy back seventy billion dollars of its own shares. Alphabet is the fourth most valuable company in the world after Microsoft, Apple and Nvidia.

This ignored the fact that Google's revenue growth, just as Microsoft presented excellent quarterly figures, was also caused by strong growth (thirty percent) of cloud services, in which AI played a major role.

Yet Google, like all other tech companies, should be valued more for long-term vision and making the right choices. With a turnover of nine billion, cloud services are almost seven times smaller than advertising turnover (62 billion), because too little focus was placed on cloud services and AI for too long. Since then, Google has been catching up.

Elon Musk is often ridiculed, sometimes rightly so, but if you take a closer look at his activities, you will see that he is exceptionally good at analyzing the right market and correctly positioning his own companies in it.

It's no coincidence that despite OpenAI's late start and dominance with ChatGPT and massive competition from Google with Gemini, Musk manages to   raise  $6 billion from investors for his AI company xAI . Last weekend that would have been three billion dollars at a valuation of 15 billion dollars, but then potential investors received an  email to the effect :

“It is now 6 billion on a valuation of 18 billion, and don't complain because there are plenty of others waiting to jump in.”

That is a text that I would also like to send around, only with a nice smiley behind it.

Elon Musk's pitch for xAI boils down to the company's ambition to connect the digital and physical worlds. Musk wants to do this by pulling training data for Grok, xAI's first product, from each of his companies, including could be. It is a worldview that will provoke a lot of resistance, but in any case it shows a long-term vision.

Decarbonization Partners : no website, but business cards that appear to be made from old tofu

BlackRock and Temasek raise $1.4 billion for climate tech

Combating the world's greatest challenge, climate change, also requires a long-term vision combined with the willingness to invest billions. The world's largest investment company BlackRock and Singaporean sovereign wealth fund Temasek have therefore  raised $1.4 billion  to invest in technologies that reduce emissions.

Predictably, the Wall Street Journal, widely read by Republican 'whoa-my-time-will-it-take' investors, does not talk about investments but about  'wagers' : bets. A term used in a casino when betting chips on red or black.

Greenhushing even erg als greenwashing

Knowing that the capital market is eyeing the results of risky investments in unproven projects with suspicion, causing more and more companies to engage in  greenhushing  rather than greenwashing, Decarbonization Partners hastens to say that it only invests at “ late stage, in proven decarbonization technologies.”

It is a shame that investing in start-ups is avoided, because there is a great need for capital for start-up, unproven companies; After all, how else will companies ever reach the stage where they have proven themselves? It's a bit like saying as a parent that you love your children as soon as they can walk properly; but how they learn to walk is something the kids will figure out for themselves.

In total, more than thirty institutional investors from eighteen countries have invested in the fund, including pension funds, sovereign wealth funds and family offices, raising $1.4 billion to four hundred million dollars more than intended.

Investments have already been made in seven companies developing various innovative decarbonisation technologies, including low-carbon hydrogen producer  Monolith  which I  wrote about last week , biotechnology company  MycoWorks  and electric battery material producer  Group14 . These are developments that give us hope.

Carbon credit fair in… Saudi Arabia

Other hopeful news that has been obscured in all the stock market chaos, a rare word in connection with Saudi Arabia, is that the world's largest oil state  will open an exchange for carbon credit trading at the end of this year  in collaboration with market leader  Xpansiv , which will provide the infrastructure for the exchange .

The announcement of a carbon credit exchange in this region can quickly seem like a chicken farmer announcing he is going vegan, but should be seen as part of  Saudi Arabia's larger plan  to transition to a sustainable economy. It increasingly looks like things are serious and it will therefore be fascinating to monitor what market share the Saudis can capture in the global carbon credit market, which  Morgan Stanley  estimates at $100 billion by 2030 .

Finally: a with a Netherlands and Singapore

To conclude, a personal note in the fifty-second edition of this newsletter. Looking back on the past year, it is noticeable that I write a lot about market developments and investments, while I started out as an entrepreneur thirty years ago.

Because I no longer manage a company, which always resulted in me running with blinders towards a dot on the horizon, I have the opportunity to guide various entrepreneurs and help them invest where possible.

Since I started this newsletter, I have regularly received friendly invitations from readers to catch up on possible joint investing. I plan to do that next month; I will be in the Netherlands and Singapore in May. If you are interested in hearing more about the projects I support, always focused on sustainability and a large international market, I would love to hear from you.

Michiel Frackers  is Chairman of  Bluenote  and Chairman of  Blue City Solutions.


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