|The "picks and shovels" theory |
Go Long Chicken Wings If You're Bullish on Driverless Cars
By Keith Naughton and Alex Webb
July 5, 2017, 6:00 AM EDT July 5, 2017, 3:16 PM EDT
- Best bets may be found in what ex-motorists do in new downtime
- ‘How much more would you drink’ if you never had to drive?
When analysts at Morgan Stanley were trying to handicap the driverless car race, their thoughts kept turning to chicken wings. And the Disney film “Frozen.” And beer.
Strange? Actually, it makes a certain kind of sense. The analysts concluded that it’s a fool’s errand to try to call at this point which tech outfits or automakers are on the road to building the best, most profitable autonomous models. Better to focus on the activities -- and the companies selling them -- that will fill our time when we’re hanging out in cars with no steering wheels to grip. Which is where the bank’s investment picks on snacking (Buffalo Wild Wings Inc.), movie-watching (Walt Disney Co.) and brews (Constellation Brands Inc.) come in.
“If you never had to drive again, how much more would you drink?” said Adam Jonas, Morgan Stanley’s automotive analyst. “It’s all about the adjacencies. If you invest in that, you’re less likely to be buying an over-hyped situation.”
As for the brands of the vehicles we won’t be driving, it’s not only the Morgan Stanley analysts who aren’t ready to definitively make that bet. Jonas and his crew like Tesla Inc. at the moment for its Autopilot feature, which has racked up millions of miles of real-world testing. Still, Jonas said, “it’s too early to call a winner.” Instead, as the bank said in a recent report, it’s smart right now to look at products and services that will benefit from a technology “that liberates hundreds of billions of consumer hours for monetization.”
continues at bloomberg.com