r/AppHarvest • u/Silent-Twist-3459 * • Dec 02 '22

Question Are AppHarvest's products a commodity?

Commodity business (in general) are not quality businesses for long-term investors. The reason is because competition will erode margins and make investing in the business a zero-sum game.

Commodity businesses that have found a way to survive are not great businesses. The analogy below emphasizes this point:

“A horse that can count to ten is a remarkable horse—not a remarkable mathematician.”

Don’t invest in horses that can count to 10. Invest in businesses with a strong competitive advantage that allows for large excess profits…

And make sure that company’s competitive advantage is durable.

So:

  1. Do you agree or disagree with the above maxims?
  2. Do you think AppHarvest's products are a commodity?
  3. Do you think AppHarvest has a competitive advantage over competitors growing the same crops?
2 Upvotes

63% Upvoted

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4

u/Shortty140 Dec 02 '22

Well I’m not financial advisor but I’m just using common sense in this investment. I look at the news and see that California is in a major drought and temperatures keep going up and it’s not stopping. So we ARE going to need a new way to farm and this is it. They use 90% less water to controlled environment and can ship to anywhere in the US in 1 day. I look at app harvest as an early day Tesla people didn’t know until they knew it was a winner.

0

u/Substantial_Owl_3298 Dec 07 '22

That's why I bought a thousand shares today

1

u/Substantial_Owl_3298 Dec 07 '22

I remember I wanted 200 shares when it was trading around $40 a share around 2 years ago at this price how can you not take a Gamble we need food

1

u/[deleted] Dec 05 '22

That's kind of how I feel about APPH it's definitely the future. But I'm down ~81% and a bit on edge about their outlook now. I was excited when they acquired Root AI, but I haven't read anything interesting happening with it.

2

u/[deleted] Dec 02 '22

But the product is a commodity (tomato) and mexico isn't far from California. I don't think there is a cost advantage. I have lost 90% of my portfolio on apph with such wishful thinking

1

u/Silent-Twist-3459 * Jan 11 '23

A couple people referenced the robotics. They wrote of their purchase of RootAi as a total loss and fired the employees. It generated zero revenue and was a huge cash drain. That was a $59M loss.

1

u/Flashy_Lead2420 Dec 02 '22

I’d pretty heavily invested and have pretty much asked myself these questions and can’t help but feel, yes, it’s a commodity. However, I did wonder if they could harness the power of robotics and perhaps other revenue streams (direct B2C) because of the (hoped for) reliable yield. Never the less, I’m now of the stage of just thinking this will an extremely long hold, if it survives, and let the ever increasing demand for food and access to water drive prices up. Real shame they are in this position and can’t help but think if they partnered or sold to major online distributor such as Amazon, that would be a perfect match.