Autonomous Vehicles: The Next Big Thing for San Francisco Tourism?
This Week In The Road to Autonomy Index — For the week of August 14, 2023, The Road to Autonomy Index declined 2.41%, while the S&P 500 declined 2.06%. The Road to Autonomy Index underperformed the S&P 500 by 0.35%.
The top performing stocks in The Road to Autonomy Index this week were NVIDIA which returned 5.98%, MunichRe which returned 3.08% and Uber which returned 2.24%.
On this episode, Grayson Brulte discusses Deere & Company, a The Road to Autonomy Index component company’s Q3 2023 earnings, the economic impact of autonomous vehicles in San Francisco and the upcoming Arm IPO.
Deere reported strong earnings with worldwide net sales and revenues increasing 12% to $15.81 billion in the quarter. Net income was $2.978 billion compared with net income of $1.884 billion from the previous quarter. For the nine months of 2023, Deere’s sales and revenue have risen 24% to $45.8 billion.
On the earnings call, Brent Norwood, Director of Investor Relations, Deere addressed autonomy and noted that there is increased demand from Deere customers for autonomy and electrification. As Deere introduces more autonomous solutions such as the autonomous 8R tractor, margins will continue to expand. In Q3 2023, Deere’s operating margin was 26.2% up from 21.2% in Q2 2022.
From farms to cities, autonomy is going to touch every aspect of society in the future. Today, San Francisco has one of the largest deployments of autonomous vehicles in operation. This has been a mixed blessing for the city as there has been quite the pushback from local officials and a select group of residents who would rather not have autonomous vehicles in their city.
While there have been mixed reactions to the deployment of autonomous vehicles, the bottom line is that autonomous vehicles are good for the city’s economy. Autonomous vehicles are injecting a much needed economic stimulus into the city’s economy, as the city’s economy has still not fully recovered from the pandemic.
San Francisco hotel occupancy rates are down from an average of 85% pre-pandemic to an average 65% today. From July 2019 to July 2023, flight boardings from SFO are down by an average of 1.1 million passengers boarding domestic flights and 300,000 passengers boarding international flights.
Could this data be a sign that domestic flights for business travel have not fully recovered or that U.S. tourists are choosing to avoid San Francisco because of the crime and drug epidemic in the city?
San Francisco needs to get clean and when it does, tourists will return once again. When they return they will not travel for the city’s famous trolley cars, Fisherman’s Wharf or Lombard Street, instead they will travel to ride in an autonomous vehicle. They will travel to San Francisco to experience the future. In the future, autonomous vehicles will become an economic tourism magnet for the city, if the city changes for the better.
But time is running out as autonomous vehicles are scaling across the country. Cruise announced on August 15th that they are expanding to Charlotte, NC. While individuals around the United States wait for the opportunity to ride in an autonomous vehicle, investors are busy preparing for a round of IPOs this Fall, as the IPO market begins to thaw. The Big IPO that investors are watching this Fall is Arm.
To date, Arm customers have shipped more than 250 billion devices running Arm architecture. In Q3 2022, reported on February 7, 2023, Arm partners shipped a record 8 billion Arm-based chips. Adjusted EBITDA was $450 million with the adjusted EBITDA margin exceeding 50%. Licensing revenue was $300m — up 65% year-over-year. Royalty revenue was $446 million — up 12% year-over-year.
The future for the economy is bright as the IPO market begins to thaw and investors continue to invest in autonomy. Autonomy is good for the economy. Today we are merely at the starting line for what is to come with autonomy and its economic impact on society. We are at the dawn of The Autonomy Economy.
The Road to Autonomy Index®
The Road to Autonomy Index is an autonomous vehicle index comprised of 38 publicly-traded companies. The Index is a rules-based equity benchmark index that is calculated by Standard and Poor’s Dow Jones Indices. The Index measures the performance of a basket of global companies that are involved in the development and commercialization of autonomous driving technologies.
Included in the Index are companies that are developing autonomous vehicles (self-driving cars), autonomous trucks and off-road specialty vehicles. As well as transportation, technology, industrial and services companies that have identified autonomy as a key component of their growth strategies.
Inclusion of a security within The Road to Autonomy Index® is not a recommendation by The Road to Autonomy Indices LLC to buy, sell, or hold such security, nor is it considered to be investment advice.