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Transcript

The closure of the Straight of Hormuz is already leading to jet fuel shortages in Asian countries, as a majority of the energy exports from the Gulf states did end up in Asia. That’s already bad enough. But Europe is already starting to see disruptions as well.

Airlines in Italy and the UK are already starting to ration fuel or cancel flights. Just recently, Lufthansa, the second largest European airline by passenger numbers, canceled 20,000 flights to ration fuel.

This is just the beginning…

Let’s discuss just how bad the fuel shortages are starting to get, and possible investment options to benefit from the chaos…

Everyone is talking about oil prices oscillating around $90 to $100 per barrel in the futures market, but jet fuel markets are being hit even harder. We’ve already seen jet fuel prices double to nearly $200 per barrel, according to the International Air Transport Association (IATA).

Oil refining capacity was already tight before the war started… and this crisis is only making things worse. Kuwait is a major producer of jet fuel, especially for Europe. The UK gets roughly a quarter of its aviation fuel from Kuwaiti sources. Kuwait is, of course, one of the Middle Eastern countries getting hit hard by Iran’s retaliatory strikes.

Diving into who got hit the hardest… it’s obviously Asian countries since 80% of the oil that transits the Strait goes to Asian buyers.

Vietnam Airlines has suspended some domestic routes indefinitely. Korean Air went into emergency management mode. There are hundreds of daily flight cancellations across Asia and the Arabian Gulf states.

China ordered all major domestic refiners to stop accepting new fuel export contracts.

Australia’s prime minister went on national television to urge citizens to take public transit to preserve fuel, both Australia and New Zealand have lucked into receiving some fuel shipments. But reserves are still only set to last around a month.

Things are getting dire in the region. and Europe is next.

The UK is likely the worst off. They’re the most exposed major economy in Europe. Kuwait has an outsized market share in UK jet fuel supply.

British Airways’ parent company IAG reportedly has five to six weeks of fuel reserves before shortages start affecting operations. That was reported around April 1st. So we’re looking at serious issues by mid-May.

Ryanair’s CEO estimates… if 10%-20% of fuel supply disappears during peak summer, airlines across Europe will be forced to cut capacity. He predicted 5%-10% of flights would be canceled this summer if the Strait stays closed. We will see how the numbers play out.

Either way, we know how jet fuel prices are looking, and as long as the war continues… it seems unlikely that prices would come down. At least in the short-term. So, what are our investment options?

When looking at the space, the reality is there aren’t any pure-play, literal jet fuel refining stocks that produce primarily jet fuel itself. In the traditional sense.

Jet fuel, which is typically kerosene, is only around 10% of the average oil refinery’s output. Kerosene is a by-product of the distillation process used to produce refined gasoline and diesel.

The U.S. refining record for the percentage of the end product being kerosene was only 11%, in 2024. Jet fuel prices skyrocketing via shortages will still benefit them, but if you’re going to take advantage of a trend… the best stocks tend to be pure-play producers. That’s why I always try to prioritize straightforward investment options with a relatively un-diversified product mix…

Interesting Oil Refiner Play

Before we talk about those options, if you want an established refiner to invest in, Par Pacific (PARR) would be an interesting stock to look into. Market cap of $3 billion.

They are estimated to have jet fuel sales revenue impact their product mix more than other refiners. Granted, it’s still not a crazy percentage. Jet fuel production could be up to 20%+ of their revenue.

Par’s Kapolei refinery produces 94,000 bpd, and is the largest and most complex refinery in Hawaii. It supplies roughly a third of the state’s refined products. Par has historically disclosed a Hawaii yield of roughly 67% combined distillate and low-sulfur fuel oil, with jet fuel being the single largest component of that distillate pool rather than diesel (which is the case for most mainland refiners).

Jet fuel likely accounts for 30–40% of Kapolei’s product yield, or roughly 28,000–38,000 bpd from that refinery alone. Which is an extraordinary concentration compared to the approximate 10–13% industry average. The Kapolei refinery was specifically configured for island demand in Hawaii, which calls for jet fuel, as tourism is such a large part of their economy.

Par also has a refinery in Tacoma, Washington, that refines 42,000 bpd, with a pipeline directly to Joint Base Lewis-McChord (formerly McChord Air Force Base). Other refining assets include one in Wyoming that processes 18,000 bpd and another in Montana that refines 63,000 bpd.

They also have some sustainable aviation fuel projects in the works. So, they are a traditional refining play that will do well in this pricing environment. Since oil prices are rising across the board, but they also have a slightly higher exposure to jet fuel price increases.

If your investment focus is purely on who will directly supply the European markets, your main options are really just the diversified oil giants. So, in my opinion, that does dilute the extent to which the share price will be impacted by jet fuel pricing itself. But if you’re interested in O&G majors with significant refining operations in Europe, you’re looking at TotalEnergies, Shell, and BP.

Besides buying oil refiners like Par, the other clear investment options would be sustainable aviation fuel (SAF) producers. SAF is produced from renewable waste or biomass and can be blended into traditional jet fuel. The price of SAF will rise accordingly, moving in tandem with traditional petroleum-based fuels.

Common examples of fuels used to make SAF would be cooking oils, ethanol, or wood waste.

SAF Producers - Investment Options

Investors can choose from three varying large public players in the SAF industry…

1. Neste is the world’s largest SAF producer with production capacity on three continents. They have a U.S. ADR with the ticker NTOIY and a market cap of $24 billion. They have SAF facilities or new projects in Singapore, the Netherlands, Finland, and California. The goal is to have renewable fuels production capacity targeting roughly 2.2 billion gallons annually by 2027, by far the highest SAF production in the world. They should benefit nicely from increasing SAF prices as the war with Iran rages on.

2. Calumet, ticker CLMT is the second player on our list. $2.6 billion market cap. Its Montana Renewables subsidiary is North America’s largest SAF producer at ~30 million gallons/year, with the MaxSAF expansion on track for mid-2026, boosting capacity to 150 million gallons/year. Set to scale to 300 million gallons by 2028. A $1.4 billion DOE loan guarantee was used to back the expansion. Calumet also operates specialty products (oils, solvents, waxes), so it’s not purely jet fuel, but SAF is its primary growth engine.

3. Gevo is the third stock, with a market cap of $430M. They are building the world’s first large-scale ethanol-to-jet fuel commercial facility (Net-Zero 1 in South Dakota), backed by another $1.5 billion conditional DOE loan guarantee. It has contracted demand for ~350 million gallons/year of SAF. Gevo achieved positive adjusted EBITDA in Q2–Q3 2025 from its ethanol and carbon capture operations, but is pre-revenue on SAF, making it higher risk.

There are some other pre-revenue companies that are looking to ramp up operations, but it would be preferable to invest in stocks that can actually take advantage of price increases over the next year and beyond. So, these are the top three I would find interesting if looking for a jet fuel investment option.

The Strait of Hormuz closure since early March 2026 has removed roughly 300,000 barrels per day of jet fuel from European supply chains, about 50% of the continent’s imports. Bloomberg estimates Europe has enough jet fuel through April, but we could see serious shortages in May. As we already discussed, various airlines are already starting to cancel flights…

It seems like we are no closer to seeing the Straight of Hormuz open as negotiations have backfired again and ships are being attacked for trying to leave. So, the situation is starting to look bleak with few options left to get the Straight back open. I am not optimistic.

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Disclaimer

This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this video constitutes a solicitation, recommendation, endorsement, or offer by Green Investing to buy or sell any securities or other financial instruments in any jurisdiction.

All content in this video is information of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this video before making any decisions based on such information.

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Trump’s New Budget Proposal

President Trump has asked Congress for a $2.2 trillion budget for discretionary spending in 2027. Which is set to include a $1.5 trillion allocation for the military. Which is a roughly 40% increase over our previous defense budget in 2026.

The President was even saying he wanted to shift to more of a wartime economy. A bit hyperbolic considering during WW2, 90% of the government’s budget went to military spending. Nowadays, it is less than 20%.

But if you’ve ever seen the memes on Twitter of people saying Trump is signing the “I Hate You All, Die” bill into law… that is quite literally what this is.

Because Trump is proposing massive cuts to the EPA, NIH, and spending for various health and environmental agencies.

Whether the cuts are even justified or not is one thing… but it’s a horrible look to slash major discretionary spending to funnel it all into funding an extremely unpopular war effort.

That $1.5 trillion breaks down to $1.1 trillion for base defense spending, and another $350 billion that the White House wants to get through budget reconciliation.

That is ON TOP of the $200 billion the Pentagon wants for the war with Iran already. That $200 billion is another separate budget item.

So, the budget is more like $1.7 trillion. The U.S. national debt is currently $39 trillion by the way.

Budget Winners

Let’s review what the budget increase will be allocated for, and what will be cut… including which stocks may benefit from these initiatives:

1. Shipbuilding. The new budget requests $65.8 billion for naval construction. For context, Congress approved $27.2 billion for shipbuilding in 2026. So we’re looking at more than doubling the shipbuilding budget. This includes 18 new battle force ships and 16 non-battle force vessels. Trump is calling for the build out of a “Golden Fleet,” including initial funding for new “Trump-class battleships.”

   1. General Dynamics (GD) is a key beneficiary as a large defense contractor, with a dedicated division to building nuclear-powered submarines and auxiliary ships for the U.S. Navy. They just secured a $1.27 billion contract modification for Virginia-class submarine support just days ago.

   2. Huntington Ingalls Industries (HII) is the largest shipbuilder for the U.S. government and the largest pure-play investment option. Huntington designs and builds amphibious assault ships, surface combatants, as well as nuclear submarines and aircraft carriers.

2. The Golden Dome. This is Trump’s signature defense initiative, a hemispheric missile defense shield designed to intercept hypersonic missiles, ballistic missiles, and even threats launched from space. The full program is estimated to cost around $175 to $185 billion over its lifetime. The 2027 budget allocates $17.5 billion for the Golden Dome in this fiscal year. But most of the Golden Dome funding will come from the $350 billion funding effort in a budget reconciliation bill. So, funding is dependent on less concrete sources right now. If that bill falls apart, so does Golden Dome’s timeline. Northrop Grumman (NOC) would be the biggest winner in a Golden Dome build-out. They are the dominant player in autonomous and space-based surveillance systems.

3. Munitions and weapons procurement. The budget allocates roughly $760 billion for weapons development and procurement combined. That’s about $260 billion for procurement and $220 billion for research and development in the base budget, with another $280 billion layered in through reconciliation. This benefits all the standard military defense contractor names like Lockheed Martin, RTX Corporation, etc.

4. Military pay raises. The budget includes a 5%-7% pay increase for service members, with junior enlisted members, those ranked E-5 and below, receiving the full 7%. They are hoping this will help with recruitment and retention, which have been issues.

5. Nuclear modernization. The National Nuclear Security Administration (NNSA) receives $32.8 billion in this budget, a $3.6 billion increase from 2026. This money goes toward developing new warheads, modernizing existing ones, and building technology for future naval nuclear systems.

6. Critical minerals. The budget includes provisions to make what the White House calls “transformative investments” in the domestic critical minerals industry, fixing what they describe as longstanding shortfalls in the National Defense Stockpile. There’s an explicit focus on reducing dependence on foreign mineral production, which is really code for reducing dependence on China.

   1. MP Materials (MP), USA Rare Earths (USAR), and others are key beneficiaries here. I made a previous video on how to invest in the U.S.’ efforts to diversify critical metals supply chains… and I’ll link one in the description. That video listed more investment ideas in the rare earths sector.

Budget Losers

Those are the six main trends or large budget items from Trump. Now, let’s talk about the other side, to partially offset this defense budget surge… the White House is proposing a 10% cut to non-defense discretionary spending. $73 billion in total cuts.

The Environmental Protection Agency (EPA) is getting cut in half. A 53% reduction. That includes eliminating the Superfund program, slashing state revolving funds for clean water and drinking water infrastructure, and killing all environmental justice programs. Not sure how much the environmental justice programs matter… but cutting funding for clean water infrastructure is a bad look.

National Institutes of Health (NIH) is taking a $5 billion hit, bringing its funding down by about 12%. Three individual institutes get eliminated: the National Institute on Minority Health and Health Disparities, the Fogarty International Center, and the National Center for Complementary and Integrative Health. The White House justification is that NIH “broke the trust of the American people with wasteful spending, misleading information, and risky research.” This is a direct callback to the 2020-era controversies surrounding gain-of-function research.

The National Science Foundation takes a 55 percent cut… from $9 billion down to $4 billion. AI and quantum computing research survive with about $886 million combined, but virtually everything else gets slashed. The budget explicitly targets what it calls “woke social, behavioral, and economic sciences.” The Department of Education sees significant cuts, including elimination of the Teacher Quality Partnerships program, $1.5 billion in cuts to the Office of Career, Technical, and Adult Education, and $354 million in cuts to minority-serving institution programs.

LIHEAP, the Low Income Home Energy Assistance Program, is being eliminated. That’s $4 billion that helped about 6 million Americans afford their utility bills. So, for example, poor Americans might go without heating in the winter, thanks to this. The administration has tried to kill this program six times now. Congress has saved it every single time so far. Other efforts for low-income Americans, such as community services grants or the Job Corps, are also being eliminated.

NOAA takes a $1.6 billion hit, with the entire Office of Oceanic and Atmospheric Research proposed for elimination.

On paper, NASA is getting a budget cut… but the budget actually requests $18.8 billion in discretionary spending for NASA, a 23% increase. In reality, Trump just wants to defund all Earth science and climate monitoring satellite programs. So, he is targeting any climate change efforts.

FEMA is taking a $1.3 billion cut to non-disaster grant programs. The World Health Organization and the Pan-American Health Organization will be defunded entirely. Biden-era infrastructure law funding for environmental programs is seeing $15 billion permanently canceled and another $4.5 billion repurposed.

Various departments are receiving broad cuts, The Department of Agriculture is being slashed 19%. Housing and Urban Development, 13%. Interior Department, 12%. Health and Human Services, 12% overall.

And the cherry on top is that the budget includes a $10 billion allocation for a mandatory fund to beautify Washington D.C. So, the President is cutting funding for a variety of beneficial government programs and signaling how much he truly doesn’t care… by funding decadence for the political class. Truly insane optics.

Of course, it’s not guaranteed that all of these changes will actually make it into Congress’ decisions. But we’ll have to see what ends up in writing. Obviously, anything reliant on environmental grants, EPA funding… environmental services, or water infrastructure could get hurt by this. Biotech as well, depending on how it plays out.

For example, a company that I have mentioned in the past, Zefiro Methane (ZEFI) is hurt by this because Trump is pausing or canceling the Biden-era funding for plugging leaking O&G wells. Much of that funding comes from O&G companies paying for the cleanup, or efforts by local governments. Seems like Trump doesn’t care about any of the negative health implications from anything he is doing and if fully prepared to just fund war efforts. So, that’s how this is going.

Shipbuilders, military contractors, and rare earth metals mining companies stand to gain from the initiatives Trump wants to put in place.

But yeah, I’ve already talked about rare earths in previous videos and military contractor names are well known, but I could make a video specifically on possible shipbuilding investment options if people wanted to see that. Either way, we’ll see how many of these changes actually make it into the 2027 budget.

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Disclaimer

This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this video constitutes a solicitation, recommendation, endorsement, or offer by Green Investing to buy or sell any securities or other financial instruments in any jurisdiction.

All content in this video is information of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this video before making any decisions based on such information.

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Call Notes:

• Now designing oil contracts, new precious metals (silver, palladium, etc), solar contracts, and uranium.

• 1500 ADV (mostly just gold) in Q4 2025. Now as of March, we are at 11,500 ADV. Trading is ongoing across all contracts, with most growth occurring on gold and LNG contracts currently.

• Overall growth of futures ADV so far in 2026 was +145% relative to Q4, 2025.

• LNG volumes have increased 84%, with a total of 59k contracts traded over GOM and NPA. The NPA contract represents over 40% of JKM’s volume, demonstrating the market’s desire for a viable LNG contract alternative.

  • Check out the Abaxx Exchange Data Tracker created by @nobenchmark

• Tends to take 3-5 years to build out a new commodity futures market to maturity, so it does take time. But these are extremely high-margin products; their software suite is the same. These are all capex-light forms of revenue generation once the design work is finished.

• MarketOS: ID++ suite of verifier, sign, messenger, and drive. Go-to-market timelines will emerge soon.

  • Three streams of revenue:

    • Platform access fees for all of the products above

    • Transaction fees on the platform

    • Basis-point fees on collateral

• This software platform can be used by any central counterparties (CCPs), prime brokers, or collateral managers in broad financial trading ecosystems. This applies to both traditional and tokenized assets.

• Digital Title pilot results:

  • Physical gold: Vaulted gold at Abaxx Spot was converted to transaction-ready collateral that could be used to finance margin trading in futures markets. Only possible with Digital Title providing documented and verifiable T+0 ownership of said gold.

  • Money market funds: Successfully collateralized a bilateral transaction of approximately $200k BMO Money Market Fund shares. These shares were transferred instantaneously upon margin call.

  • In-transit commodities: Testing in progress with Minehub Technologies for Digital Title usage on bills of lading for collateralization to be used in trading.

• Abaxx Clearing is working on integrating MarketOS already, subject to regulatory approval.

• First commercial licensing agreement for MarketOS usage is in advanced negotiations with a “traditional financial institution.”

• Recognized losses of around USD$30 million over 2025, slight 5-10% deficit increase in Q4 2025.

• The management team reduced 2025 year-end equity compensation by 20%.

• Josh is forgoing all of his year-end equity compensation in 2025 to leave more room to compensate a growing team… wow.

• They have CAD$15 million left in cash, CAD$35 million in marketable assets, so they have a cash runway at least through the end of the year.

• Current trading on the exchange is almost entirely just from Singapore, Thailand, with new Middle Eastern and Indian trading firms gaining access recently as well. Almost no trading from the United States, China, UK, etc. Onboarding is in progress with firms in all of these regions now.

• One leading U.S. bank FCM is looking to connect to the exchange, another two looking to join through a carry broker.

• Trayport connection has prompted three large banks to start onboarding on the exchange.

• In summary, there are a variety of clearing firms still working on connecting to the AEX.

• Josh is beginning to tease Nasdaq and SGX listings on Twitter. The company finally seems to be approaching that point.

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Transcript

Anthropic, the artificial intelligence company behind the Claude AI models, is planning to IPO this year. There’s no set date yet, but estimates are sometime in Q3 or Q4 of 2026. They might raise as much as $60 billion when they go to market.

The company was founded by seven former OpenAI researchers, led by the siblings Dario Amodei and Daniela Amodei. They had disagreements with OpenAI on safety and commercialization, thus Anthropic was born.

As of the most recent funding round in February, Anthropic is currently valued at $380 billion in private markets. Investors included Amazon, Google, Microsoft, Nvidia, and a variety of equity and sovereign wealth funds.

AI is obviously still a hot industry, and institutional and corporate investors want in just as much as retail will when this thing finally goes public.

Business Model

Diving into their business model, if you know anything about AI, their main path to revenue is by selling subscriptions:

• 70%-75% of revenues come from API consumption, usage in corporate/developer environments with customers paying-per-token for model access.

• 10%–15% of revenues comes from Direct-to-Consumer subscriptions (Claude Pro/Max)

• And another 10%–15% of revenues come from specific enterprise partnerships

Keep in mind, Claude has only recently been in the news after their falling out with President Trump over safety guidelines Anthropic was not willing to budge on. Most consumers had no idea what Claude was until then. This company has been focused on B2B, with 70%+ of its revenue being generated from enterprise customers.

OpenAI’s ChatGPT is, of course, the AI model everyone tends to think of when they think of AI since it became a phenomenon in 2022.

Anthropic has over 300,000 business customers and 70% of Fortune 100 companies are Claude customers.

The business model is obviously capex-intensive. Training frontier AI models costs billions per run. They have to build costly data centers. Anthropic has committed to roughly $80 billion in cloud infrastructure investments, buying more cloud services and computing power from big tech firms through 2029.

They have also committed to investing $50 billion to build AI data centers across the United States, including facilities in Texas and New York.

The company is unprofitable and burned approximately $3 billion in cash in 2025 and does not expect to reach cash-flow breakeven until 2028. Gross margins are currently around 50%, with management projecting as high as 77% margins by 2028 as they scale and renegotiate compute contracts.

Their revenues are a mixture of recurring subscriptions and usage-based consumption. Subscriptions give them some revenue predictability, but the majority of their revenue is from usage, which can be volatile. The enterprise focus does provide stickier revenue dynamics than a more consumer-focused model like ChatGPT.

Growth Opportunities

Anthropic has proven it can consistently release new features for consumers. Their current best model, Claude Opus 4.6, has consistently ranked as the top model in a competitive industry. Granted, these rankings change all the time, as these AI firms are constantly releasing new models.

The recent releases of Claude Code, a command-line coding agent, and Claude Cowork, their daily-task productivity agent… have impressed consumers in the space. In less than a year, Claude Code hit $2.5 billion in annualized revenue. Business subscriptions for the service have quadrupled in the first couple of months in 2026.

Also, something that just happened recently, we saw Anthropic make the mistake of leaking the code for their Claude Code application. Not the code for their actual AI models, but the Claude Coding service.

The issue was caused by human error, when someone over at Anthropic left a source map file, used for debugging, in a public registry that allowed developers to reconstruct the source code. Massive blunder by the company. No customer data was leaked, but throwing your code out for everyone to see does not help you maintain a lead over the competition. But I digress…

Claude is also the only AI model available across all three major cloud platforms. AWS Bedrock, Google Cloud, and Microsoft Azure. No other model developer has that level of distribution right now.

Anthropic is estimating that global AI spending will hit $2 trillion in 2026, and the company is positioned to capture a disproportionate share of that through its enterprise sales focus.

Anthropic’s management team has been projecting:

• $20 billion to $26 billion in revenue for 2026.

• Upwards of $55 billion in 2027.

• Upwards of $148 billion by 2029.

It’s difficult to know what products they might release to increase revenues further, the industry is constantly evolving. But even just current growth rates with their various subscriptions and model usage is more than enough on its own. Everyone knows AI is seeing insane growth.

Anthropic is still in the early innings of penetrating European, Middle Eastern, and Southeast Asian enterprise markets. Any region, really.

The company’s current annual recurring revenue (ARR) as of this month… is running at approximately $19 billion, according to Bloomberg. That is up from $9 billion at the end of 2025. So, their ARR is rising rapidly as Claude’s popularity has grown. Up 111% in just three months…

If you assume this $19 billion run rate is going to stick, or grow, then Anthropic is currently trading at nearly 20x revenues. Given their latest funding round, which valued them at $380 billion.

This valuation assumes they’re going to continue running incredible growth rates. And it’s hard to see how they won’t. Who knows what market cap the IPO might be placed at, but no doubt it will be pricing in perfection. Any slip-up or market crash, and investors will get punished.

Competitors

A key aspect of investing in the AI industry and Anthropic, is going to be… who wins the AI race? The competitive landscape has 4 primary competitors remaining.

OpenAI is the most direct competitor. With a projected $29.4 billion in full-year 2026 revenue and 800 million weekly users, using ChatGPT. OpenAI has a larger consumer business and higher overall revenue.

However, OpenAI is burning cash at a far higher rate… projecting $74 billion in operating losses through 2028. They are not expected to reach profitability until 2030, two years after Anthropic’s target.

OpenAI was recently valued at $850 billion in private markets. The key competitive difference between these two is that Anthropic leads in enterprise adoption. Anthropic has roughly 40% market share versus OpenAI’s 25%, while OpenAI dominates the consumer side of the market.

Google DeepMind is the second major competitor, with their Gemini models. Google does have the advantage of massive existing assets in cloud and search infrastructure. Google holds roughly 21% enterprise AI market share. Google has also invested $3 billion in Anthropic and provides TPU access, so the relationship is both competitive and cooperative.

Meta is number three. Meta does not sell model access via API but has become the primary force behind open-source AI through its LLaMA models. Meta’s strategy is to commoditize the base layer of AI, aka the model itself, and make AI access cheap or free.

Instead, the value would then shift to who owns the applications built on top of the open source models. This would directly undermine the business case for paid API access from companies like Anthropic.

If open-source, free models can do most of what Claude can do over time through open development… then Anthropic has to do more to justify their subscriptions, right.

xAI is the last competitor worth mentioning, via Grok. xAI has raised significant capital and recently merged with SpaceX ahead of its own expected IPO. It has less enterprise traction but benefits from Musk’s distribution network through Twitter.

There are a few Chinese players, some in other regions, but it’s clear that the American tech companies are the ones with all of the best models right now.

Who gives up, out of these four companies, could cede billions of dollars in revenue to the other players… so it will be interesting to see if any other companies drop out of the AI race.

Meta is in their own world, but it’s possible that we see either OpenAI or xAI have to drop off because of the massive capex required to compete.

Granted, it seems like these companies have endless levels of capital to access from private equity and corporate investors.

So, it’s hard to see any of them drop out unless liquidity dries up.

Competitive Moat

Moving on, we have to consider how much of a moat Anthropic really has

In theory, barriers to entry help them avoid new competition entering the industry by now, investing billions in building new data centers or computing power is simply not viable for most companies.

With that said, they are in a cutthroat competition with the remaining tech companies. So, that’s not much of an advantage.

Switching costs can be a pain for enterprise and retail consumers, once you’re using a model in all of your workflows… it’s a hassle to switch everything over. But that can be done. And the U.S. government is. They are swapping over from Claude to ChatGPT.

Overall, the industry is firmly in oligopoly territory, so the AI market is currently a tit-for-tat between the top companies on who has the best model. And the sector is constantly evolving over time.

As consumers, that competition works in our favor, but as investors, it leads to a brutal competitive landscape.

Risks

Diving into the risks of investing in Anthropic, I think it should be pretty obvious…

Capital-intensive data centers are burning billions in investor capital. All of these companies are running large losses. The AI arms race requires continuous massive investment in compute, and any slowdown in revenue growth could force Anthropic to raise more capital.

As we just went over, competition is fierce from both open-source and walled-off AI models, granted the industry is finally starting to consolidate.

And then the primary risk is probably some form of major government crackdown on Anthropic specifically or the AI sector at large. Potential copyright infrigement issues are still unsolved. We know Trump wants an AI legislation moritorium, but anti-AI sentiment has been growing… so. That’s something to consider.

In summary, you might struggle to find any other companies in the world that can grow as quickly as the AI model developers. Every big tech company you can think of is all in on this industry, besides Apple lol.

Investors will undoubtedly love what they’re seeing. I’m sure many retail investors are foaming at the mouth to get a chance to buy some of these pure-play AI companies. But the risks are certainly there, and you could see some black swan absolutely blow these companies to smithereens after they IPO.

With that said, I am under the assumption that they will reach profitability in the future. Much like Uber has relatively recently. It just took the industry quite some time to mature to that point. Anthropic is targeting 2028, and it wouldn’t surprise me at all to see them reach profitability.

I don’t tend to invest in stocks this large regardless, but especially not when the global stock markets and financial economy are in a dire situation thanks to the war in the Middle East. Either way, Anthropic should be dropping their S-1 form relatively soon, which would give us more info on their operations. So, investors will have to wait for that and see what they think.

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Disclaimer

This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this video constitutes a solicitation, recommendation, endorsement, or offer by Green Investing to buy or sell any securities or other financial instruments in any jurisdiction.

All content in this video is information of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this video before making any decisions based on such information.

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SpaceX IPO

SpaceX is about to be the biggest IPO in history, potentially raising as much as $75 billion at a $1.75 trillion valuation. The timing of the IPO is unknown, but estimates suggest it will happen in the summer.

They plan to raise more than double the previous record holder, Saudi Aramco, which raised $29 billion during its IPO in 2019. The world’s largest oil producer, almost entirely state-owned in Saudi Arabia.

Business Model

Let’s talk about what we know of SpaceX’s business. We don’t have an S-1 to get concrete details on their financials, or some other important info. For now, we can cover what has circulated in the news or analyst reports.

As you likely know, Elon Musk founded SpaceX in 2002 with one central goal: dramatically reduce the cost of space access, and eventually make humanity multi-planetary.

So, when many people think of SpaceX, they often think of the reusable rockets like the Starship and Falcon. You’ve probably seen the video of the spaceship landing back into the arm grabbers…

But the majority of their revenue is actually generated by Starlink, their constellation of roughly 10,000 satellites, that serves internet access to more than ten million broadband subscribers in over 160 countries. The satellite internet division is their true cash cow. PitchBook estimates Starlink generated roughly $10.6 billion dollars in revenue in 2025, representing about 67% of total company revenue at a 54% EBITDA margin. A type of margin you wouldn’t typically expect from what sounds like a capex-intensive business.

SpaceX, like Tesla, has substantially reduced costs through vertical integration. They design, manufacture, and launch their own satellites… and operate the entire network and supply chain.

That plays a key role in their second business line, the launch services. Putting spaceship payloads into orbit for government and commercial customers. Launch revenue was an estimated $3.5 billion in 2023 from Falcon 9 and Falcon Heavy missions, with individual Falcon 9 launches running about $62 million each and Falcon Heavy at around $125 million.

SpaceX is one of the largest U.S. government and military contractors, including a $5.9 billion Pentagon deal for 28 national security launch missions through 2029, and an $843 million NASA contract to deorbit the International Space Station (ISS)

SpaceX also holds broader contracts for commercial crew flights and cargo resupply missions to the ISS, as well as for the Artemis III Human Landing System using Starship.

So, much like Palantir, SpaceX will have incredibly sticky revenues from government contracts for the space launch business. And subscription revenues from residential or commercial customers for Starlink internet services.

Starlink also provides services through Starshield, similar to Starlink but for government or military applications.

This is a capital-intensive business for sure… but this level of recurring revenue, from subscriptions and contracts, is like investor heaven.

In total, PitchBook and Morningstar estimate SpaceX generated approximately $16 billion dollars in revenue and $7.5 billion in EBITDA in 2025. Revenue is expected to hit $22 to $24 billion this year. 50% potential revenue growth for a business at a nearly $2 trillion market cap is amazing. Granted, at these numbers, with a $1.75 trillion IPO, that means SpaceX could open trading around 95x times revenue and 200x times EBITDA.

Incredibly expensive, but if the markets over the last decade have proven anything, it’s that valuations can remain overextended for many years. So who knows. Companies like Palantir and Tesla have done well, overall, regardless of what the markets would traditionally think…

Their revenues are set to grow dramatically thanks to Starlink, and the kicker will be their direct-to-cell offering. DTC was initially rolled out in 2025 with T-Mobile, providing access directly to unmodified phones, without any need for a modem. The service now extends to AT&T and Verizon customers as well. This new piece of the business already has over 6 million monthly customers across 22 countries.

SpaceX’s deal with EchoStar, valued at $19 billion in total through 2027 in cash payments and stock, granted them access to Echo’s spectrum-platform and licenses to offer increased access to DTC customers across the globe.

As SpaceX enters more markets and expands coverage around the world, they have large potential markets to enter in developing economies. So, growth won’t be slowing down any time soon…

PitchBook projects the subscriber base could reach over 1 billion users by 2040. Even a fraction of that number translates to significant growth. So, the business is firing on all cylinders and has hit the growth phase of its lifecycle.

TAM and Competition

The World Economic Forum and McKinsey project that the space industry will be valued at $1.8 trillion by 2035, roughly tripling from current levels. Novaspace projects it will $1 trillion by 2034.

And there are various other estimates of course, they all point to one thing, substantial growth. And with substantial growth potential, substantial TAMs, comes competitors.

In launch services, Blue Origin is the most direct peer. Jeff Bezos’s company launched its New Glenn heavy-lift rocket in January 2025.

The United Launch Alliance, the Boeing-Lockheed Martin joint venture, operates the Vulcan Centaur rocket, which gained Space Force certification in early 2025. ULA has deep government relationships and receives roughly one billion dollars in annual military subsidies, but it cannot compete with SpaceX on price. Boeing and Lockheed will likely be totally focused on securing government contracts, but SpaceX has the clear advantage in both cases.

Rocket Lab (RKLB) is the most obvious public competitor for SpaceX. Its smaller Electron rocket has demonstrated real launch reliability, and the company is developing a medium-lift Neutron rocket, competing with SpaceX on smaller payload and satellite missions.

In the satellite broadband space:

1. Amazon’s Project Kuiper (Kyper) is on the rise. Amazon has committed $10 billion dollars to deploy 3,200 satellites by 2029. Kuiper has the capital and logistics infrastructure of Amazon behind it, but it’s years behind Starlink, which already has around 10,000 satellites in orbit.

2. OneWeb operates about 640 satellites with a focus on enterprise and government clients.

3. The EU’s IRIS program operates a network of 300 satellites to reduce reliance on foreign competitors for broadband services.

So, there is some competition for all aspects of SpaceX’s business, but they have a massive first-mover advantage here. No competitor out right now can match its vertically integrated model, where it launches its own satellites on its own rockets at its own cost structure.

A Wide Moat

This brings us to the question of how strong SpaceX’s moat is… and It is probably one of the widest existing moats in history. But competitors with vast resources, like Amazon, or Boeing and Lockheed, can crack it eventually.

No other company has figured out reusable boosters and this level of vertical integration. So, SpaceX’s launch costs are around 70 to 90% below what competitors can offer right now.

Of course, building and flying rockets requires billions in capital investments, years of development, and regulatory approval from government agencies. SpaceX launched its first rocket 4 years after the company was founded in 2006. And the first successful launch was 2 years later in 2008.

Switching costs are also high for government customers. If the U.S. Pentagon is relying on Starlink for battlefield connectivity or SpaceX for national security needs, then they are unlikely to replace that infrastructure.

In summary, you’re looking at cost leadership, regulatory barriers, and switching costs that put SpaceX in a great position, at this point.

Risks

Of course, first off, you have Elon Musk. He is the CEO, CTO, and Chief Designer at SpaceX. Whatever your personal opinions on the man, he is a genius, but… Musk is now splitting his time across at least six major ventures plus government advisory work. The man is distracted, and gets himself into trouble meddling in politics now.

Providing so many services to the U.S. government can also hurt him in markets like China or Russia. Usage by Ukrainian military forces and potentially in other military conflicts could even make SpaceX a military target.

Who knows how likely that is, but it is a possibility. So, anyone investing in SpaceX should realize both the positives and negatives Musk brings.

As I mentioned, competition with Amazon is intensifying and they can allocate essentially an unlimited level of capital if they choose to. Which would threaten Starlink’s growth. The payload launch business is more challenging for competitors to contend with.

Another one is, as I talked about at the start of the podcast… the valuation. 200 times EBITDA leaves little room for error. If the market crashes cause of the conflict in the Middle East, investors buying at IPO could get burned for years.

Any delays on Starship commercialization or slowdowns on Starlink subscriber growth could compress growth multiples and have a similar effect. People should be prepared to hold this stock for a long time if they want to buy in immediately.

SpaceX Subsidizing Musk’s AI Investments

And lastly, the acquisition of xAI and Twitter into SpaceX is clearly an attempt by Musk to justify his investments in the AI race. Merging an AI startup burning over $1.5 billion a quarter building out data centers into SpaceX, which has become incredibly profitable… just hurts the profitability numbers. Why should SpaceX have to subsidize Musk’s AI investments? Twitter is also losing $500 million a quarter, I believe. So, that’s over $2 billion in quarterly losses that SpaceX has to deal with.

There was also $17.5 billion in debt from xAI and Twitter combined, which has now been paid off. They did not say where the company came from, but xAI did do a $20 billion raise in January, so seems like it came from diluting xAI equity. They at least didn’t have to use SpaceX’s cash to do it. But it’s still ridiculous to me.

Musk justified merging Twitter and xAI into SpaceX because of the central data center issue. Maybe in the future… SpaceX can integrate with xAI and launch data centers into orbit.

This plan to create data centers in space, powered on solar power with no need for cooling… is just absurd. At least on any reasonable timeline. Remember, Elon Musk first talked about having 1 million Tesla vehicles in a Robotaxi network in 2019, and Tesla was just now getting the network started in 2025. Musk is now promising data centers in space in just 2-3 years from now. This man always predicts things will happen faster than they do. So… maybe it happens eventually. But it won’t be any time soon.

Sure, the acquisitions… in theory, made SpaceX more valuable. But this is a net-drag on the business. The only reason it makes any sense is cause Musk owns all the companies. Grok is over it’s head, in one of the most competitive markets on the planet right now, the AI race. Dealing with Google, Anthropic, and OpenAI.

SpaceX’s COO even said herself, xAI is largely operating as its own entity after the acquisition, so I don’t how the market can justify this is a good thing, but whatever. Elon gets to do what he wants.

Overall, SpaceX seems like it is a great business, but as always with Elon’s companies, the valuation is rich. We can see more concrete details when they file an S-1 form with the SEC, which might happen as early as next week.

I think there is a good chance retail investors get totally burned on this IPO, which insiders or large investors could use for exit liquidity right before a potential market crash due to a brewing energy crisis. But only time will tell. Long-term investors will be pleased with SpaceX, in the long run, either way if the company sustains the levels of growth it is seeing right now. We will have to watch and see what happens…

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Disclaimer

This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this video constitutes a solicitation, recommendation, endorsement, or offer by Green Investing to buy or sell any securities or other financial instruments in any jurisdiction.

All content in this video is information of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this video before making any decisions based on such information.

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Helium Shortage Inbound?

The closure of the Straight of Hormuz, thanks to the conflict in the Middle East, is choking off significant percentages of the world’s LNG and helium supply.

Morgan Stanley is warning that Taiwan typically only has about 10 days of LNG reserves, they are securing LNG cargos, but if this war is prolonged then the island could face major energy shortages.

Especially considering they have been shutting down nuclear power plants. Taiwan Semiconductor obviously can’t make semis without power.

So this shortage of natural gas supply from the region is hitting the Asian and Middle Eastern countries hardest.

Europe isn’t much better off, in some ways it’s even worse lol.

But everyone knows about the situation on the O&G front already. But there is a second commodity, that’s crucial to the semiconductor industry that is also set to face major shortages if this continues for long. Helium.

Qatar produces around 35% of the world’s helium supply, roughly 2.5 billion cubic feet (Bcf) annually from three extraction plants at the Ras Laffan Industrial Hub. They also produces 20% of the world’s LNG supply and 70% of the LNG supply from the region. The helium is produced as a by-product of LNG liquefaction…

So at least a third of the world’s helium supply comes from a single centralized location. Which has been shut down thanks to a drone and ballistic missle strikes on Ras Laffan, along with the blockage of the Straight.

That helium is shipped in specialized ISO containers on vessels that are currently stuck in the Persian Gulf, unable to leave.

Helium is non-substitutable in many critical applications.

• It cools the superconducting magnets in MRI machines.

• It’s essential for semiconductor manufacturing (cooling silicon wafers and etching processes).

• Pressurizes rocket fuel tanks for space programs.

• Enables fiber optic cable production.

And most of these applications require an incredibly high concentration of helium, we’re talking over 99.999% purified, several more decimal points out. Which limits supply even further.

The helium market entered 2025 in modest oversupply, with new capacity from Russia’s Amur GPP natural gas plant (that also produces helium), new Canadian facilities, and Linde’s Freeport plant.

These new plants pushed the global supply to ~6.5 Bcf against ~6.0 Bcf demand.

That gets thrown out the window with Qatar offline…

A popular consultant in the helium industry, Phil Kornbluth, has noted that the world simply cannot compensate for losing a third of its helium supply. Other producers like the USA, Algeria, Russia, and emerging Canadian operations… cannot ramp fast enough.

Semiconductor manufacturers have dealt with perpetual shortages of helium throughout the past two decades. This would be the industry’s sixth shortage since 2006… so many producers maintain several months worth of reserves.

The industrial gas giants in the industry like Linde, APD, or Air Liquide can provide a buffer for manufacturers since they have reserves as well, but that won’t last long if Qatar is shut down for an extended period of time…

Investment Angle: Helium Producers

So the question is, how do we benefit from a potential helium shortage, from disruption in the Middle East?

Buy stocks that produce helium in regions like North America. Which is where most of our potential investment options are located.

I will give you a short list of my top 3 investable companies that have already produced helium, or are already in the process of building a plant to produce or refine it.

The exploration business is significantly riskier so I strongly prefer companies that are already producing, or close to producing helium so they can actually take advantage of rising prices.

The benefit of investing in the helium industry is that it operates similarly to oil and gas, it’s the same extraction process.

So, there is already a workforce in place to hire talent from, and it doesn’t take as long to start generating revenue than it does in the mining world.

Helix Exploration

Helix Exploration (HHEXF) is the first stock on our list. Market cap of approximately $95 million USD. They are the first ever helium producer in the state of Montana. Their project in Montana, Rudyard project in Hill County sits on 5,600+ acres along the Sweet Grass Arch in northern Montana.

Helix drilled or acquired 4 production wells, all encountering commercial helium. Around 1% helium grades, which is considered economic.

The company purchased a proven Helium PSA processing plant for just $500,000, the unit had operated continuously from 2015–2022 with 98.5% uptime and 48,000 Mcf/year helium capacity.

It was refurbished and installed at the Rudyard project, with three helium wells already tied to it.

With a helium price of $300 to $500 Mcf that translates to between $14 million and $24 million in revenue. If we see helium prices skyrocket and Qatar helium production stays offline for a few months, or longer… then we could see that revenue figure explode higher. All depends on the geopolitical situation.

The stock has tripled since it listed due to how successful they have been, so recent news has been priced in, but if the conflict gets out of hands they they will be positioned to take advantage of rising prices.

Helix has no offtake agreements in place yet, as they were waiting to produce consistent helium supplies before signing any agreements. But potential distributors have visited the project, so they might have news there soon.

Given their operational results being priced in, this one of the more expensive helium stocks, the only downside I see with this one over a longer time horizon is that they have one of the smallest land packages of all the helium companies. Only around 5,000 acres for this project. Granted, they have some other exploration acreage in other regions.

Avanti Helium

Avanti Helium (ARGYF) is our #2 stock to mention. They have a market cap of $43 million USD. Avanti’s flagship helium asset is the Greater Knappen project, which spans approximately 75,000 acres across Montana and southern Alberta. They also have an additional 63,000 acres of exploration permits in Saskatchewan, totaling over 150,000 acres. All three wells drilled so far have encountered helium.

Two of the 3 wells were around 1.1% helium grade, and the third well was 0.41%, so the third well wasn’t as good.

But the second well they drilled, WNG 10-21. is considered one of the most prolific helium wells drilled in the last few decades in North America. Namely because of the incredible flow rate of helium.

The well was flowing over 20 million standard cubic feet per day. For reference, Helix’s wells are flowing around 2-3 million cubic feet per day. So, Avanti’s assets seem promising so far. Granted it isn’t very many wells yet.

In terms of processing the helium, Avanti has signed a definitive agreement to relocate an operational processing plant for $1.25 million. Similar to what Helix did with buying an existing plant instead of building one from scratch. The plant has existing capacity to process 100 Mcf per day of helium, with potential to upgrade to 150 Mcf per day later on.

The purity the helium is being refined to can also be upgraded. They are targeting their first helium sales, once the processing plant is reestablished at their project in mid-2026.

Avanti has signed a binding 3-year take-or-pay offtake agreement, which was finalized in August 2025, with an unnamed “leading global supplier of industrial gases.” And that is for 33% of the processing plant’s output. At least a majority of their supply is not contracted yet so it can be sold in spot sales for higher prices if the Middle East situation devolves further.

Overall, Avanti is a bit riskier than Helix since something could go wrong with establishing helium production and processing, but that also leads to greater reward if everything goes well and success isn’t priced in like it is for Helix. Either way, I think both Avanti and Helix are in similar situations from a fundamentals perspective.

But they are the best pure-play investment options that will be ready to take advantage of incoming price increases, in my opinion. Now, this is without me having had the time to research aspects like the management teams of these companies. Just going off of fundamentals, these seem to be the best two from what I’m seeing. Again, don’t take that as financial advice and make your own decisions. Do your own research.

Blue Star Helium

Now, our third stock of interest is Blue Star Helium (BSNLF). With a market cap of $27 million USD. Blue Star is a helium explorer and producer, focused on developing the Galactica-Pegasus project in southern Colorado.

The company holds approximately 312,000 gross acres of helium and CO₂ prospective acreage. Blue Star discovered the Galactica-Pegasus field in 2022 with four consecutive exploration wells returning helium concentrations as high as 6.06% at Galactica and 8.8% at the nearby Voyager prospect…. these are among the highest primary helium grades in the United States.

The company farmed out 50% of Galactica-Pegasus to Helium One, another public helium explorer. So the project is now a 50/50 JV with Helium One. Blue Star received US$1.5 million in cash plus ~US$2.7 million in free-carry development well funding, while retaining the operator role.

Blue Star and Helium One drilled seven-wells in the first half of 2025, with wells at a helium grade of 0.41% to 2.17%. The gas composition in the wells has been predominantly helium, carbon dioxide, and some nitrogen. The carbon dioxide can be processed as well and provides a secondary revenue stream that other peers don’t have.

The Pinon Canyon processing plant, designed and partially operated by Cimarron Midstream, achieved first refined helium in December 2025 and commenced fully integrated operations in March 2026. Four wells are currently producing into the plant, with two more awaiting tie-in.

CO₂ liquefaction and sales are targeted before the end of H1 2026, with merchant CO₂ pricing of $150–600 per ton representing a meaningful additional revenue stream. No binding long-term contracts have been signed yet, with negotiations ongoing for a variety of helium and carbon dioxide buyers.

Beyond the Galactica project, Blue Star holds an option on the Great Plains Field where the historical Bubba State-3 well flowed at 740 Mcf/d with 2.01% helium (better flow rate and grade than Galactica), so they have other promising exploration targets. The full Galactica development plan envisions 15+ total wells.

I consider Blue Star the worst of the three, while still promising, because they had to give away half ownership of their asset, and they have had declining helium grades feeding into their development asset.

What About Other Options?

People might see this post, and if they know some of the other companies in this industry, they may ask… why not ASP Isotopes, why not Pulsar Helium, and so on. ASP is not a pure-play helium company, their real substantial helium production would come from Phase 2 of their project, that isn’t going to be done for at least 4 years, and their management team has perpetually promised results that have not materialized. I think there are better optons for helium exposure.

In regards to Pulsar Helium or some of the other exploration options, I think the best, relatively sure-bets to actually take advantage of the price increases from volatility in the Middle East… will be existing producers. And Pulsar is likely around 2 years out from being able to produce any helium, if not longer. It could be interesting to watch, but doesn’t seem like the best buy right now.

I’m personally looking for already producing assets, outside of geopolitically dicey regions, with strong helium grades, hopefully prudent management teams. If a company has all that then they are already in a far stronger position than most companies you could look at in the commodities sector as a whole. If I end up buying one or multiple of these stocks, I will probably make a separate post talking about that. But for now I don’t own any of these companies. And I am going to continue watching how events unfold in the Middle East as that will decide how well these stocks perform…

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Disclaimer

This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this video constitutes a solicitation, recommendation, endorsement, or offer by Green Investing to buy or sell any securities or other financial instruments in any jurisdiction.

All content in this video is information of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this video before making any decisions based on such information.

P.S: None of these companies paid me or anything like that, I’m just providing some thoughts on some of the names I think might be the best… so others can research further if they like.

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Fertilizer Supply In Jeopardy…

A third of the world’s fertilizer travels through the Straight of Hormuz every year, and we still have nearly zero vessels traveling through the shipping lanes, since Iran continues to threaten violence.

With the shut down of LNG production at QatarEnergy’s Ras Laffan and Masaieed facilities, that also impacts the Qatar Fertilizer Company, which is the world’s largest urea supplier.

Bahrain’s Bapco Energies, which produces sulfur, and SABIC in Saudi Arabia have also had to curtail all production as none of their exports can leave the Gulf region.

In total, 46% of the world’s seaborne urea exports and 44% of its sulfer exports also travel through the Straight, which are key inputs for various fertilizers.

That’s already bad enough, but the blockage of natural gas supply is exacerbating the situation even more, since many Asian countries rely on this energy to power their fertilizer plants. So far, we’ve seen negative effects in Bangladesh and India. Which we will talk about in a bit, but first we have the most recent news out of China.

China

On March 16th, Bloomberg reported that China had ordered exporters to halt outbound shipments of nitrogen-potassium fertilizer blends.

Beijing also reiterated existing restrictions on urea exports… there would be no new export quotas issued anytime soon. In mid-March, Reuters reported that Beijing also banned exports of certain phosphate varieties.

China shipped over $13 billion dollars in fertilizer last year, they’re one of the world’s largest exporters.

According to Reuters’ analysis of Chinese customs data, between 50 to 80% of China’s fertilizer exports are now restricted. That could mean up to 40 million metric tons of product locked inside China’s borders.

They are keen to prioritize food security and insulate their domestic market from price shocks.

China imports around 45% of its crude oil from the Middle East and 25%-30% of its LNG. Half of the 9.6 million tons of sulfur China imported in 2025 came from the Middle East, and sulfur is essential for making phosphate fertilizers.

Chinese fertilizer plants that can’t get their feedstocks on schedule are facing rate cuts or temporary shutdowns.

The countries that depend on Chinese fertilizer are now in serious trouble.

Last year, China supplied roughly a fifth of fertilizer imports for Brazil, Indonesia, and Thailand. A third for Malaysia and New Zealand. About 16% for India. So, China closing off its markets only makes the situation worse…

Bangladesh

In Bangladesh, they have already had to shut down five of their six urea fertilizer plants due to natural gas shortages.

Bangladesh gets roughly two-thirds of its imported gas from Qatar. When QatarEnergy halted shipments, Bangladesh’s gas supply cratered. The government ordered the shutdowns to conserve what gas remained for household use and power generation.

Bangladesh needs about 2.6 million tons of urea every year for agriculture. They only produce about a million tons domestically… the rest is imported, largely from the Middle East. So they were already dependent on imports, and now their domestic production has collapsed too.

The government says they have 468,000 tons of stockpiled urea. Enough for now. But that clearly won’t be enough. They’re issuing emergency tenders LNG cargoes…

India

Moving onto India, they are the world’s largest importer of urea.

Bloomberg reported on March 4th that Indian urea producers had started trimming output after Qatari LNG supplies were suspended.

By March 11th, the situation had escalated… companies including the IFFCO, the Indian Farmers Fertiliser Cooperative, India’s top producer, had either halted facilities or moved up annual maintenance schedules.

Even if gas supplies were able to reach the country, it could take up to a month to get these facilities back online.

The Indian government invoked the Essential Commodities Act on March 9th, issuing what they called the Natural Gas Supply Regulation Order. Fertilizer plants are receiving 70% of the gas they garnered over a previous six-month average. So, they are already starting to ration natural gas supply.

More than half of India’s imported natural gas comes from the Gulf countries. India’s 32 fertilizer manufacturing plants all run on natural gas.

India imported over 40% of its urea and diammonium phosphate (DAP) from the Middle East last year. They’ve been scrambling to line up alternative suppliers like Indonesia, Malaysia, Egypt, and Russia, but they are competing with a variety of countries for the same supply.

Others From The MENA Region

All of this disruption is happening right before growing seasons in the Spring and Summer. Which means reduced crop yields, and price inflation in not just India. But likely across the globe.

In Pakistan, fertilizer producer Agritech announced its gas supply had been completely cut off. Pakistan is essentially 100% dependent on Qatari gas imports.

Egypt is facing similar issues. Egypt, which is one of the top ten fertilizer exporters globally and the largest in Africa, has its own vulnerability: it has relied heavily on Israeli gas imports, which are all shut down due to the conflict.

We are seeing fertilizer production or its inputs curtailed across the region.

Europe

Europe is getting hit too, even though it’s not directly importing from the Gulf on the same scale. The numbers aren’t much better. Dwindling O&G supplies coming in from Russia is certainly making things worse...

Poland’s Grupa Azoty, one of the largest fertilizer producers in the European Union, temporarily stopped accepting new orders for nitrogen fertilizers.

Slovakia’s Duslo, the country’s largest fertilizer producer, cut ammonia production to the “technical minimum.”

CRU Group, the commodities analytics firm, estimates that about 20% of European ammonia capacity and 25% of urea capacity are currently curtailed.

The timing of this war is catastrophic. The Northern Hemisphere spring planting window runs from mid-February to early May. And fertilizer is applied early in the crop cycle. If farmers can’t get it now, they have three options:

1. Pay astronomical prices for whatever’s available, which crushes their margins.

2. Reduce application rates, which means lower yields.

3. Switch crops, move from nitrogen-intensive corn to other crops like soybeans.

If we see crop switching on a mass scale, we’re looking at a major corn production shortfall in 2026, which cascades into livestock feed, ethanol, and consumer food prices.

It’s too early to say if we are going to see a global famine, but that at least seems likely in poorer regions of the world. Developing nations.

First world nations might be a bit better off, but we could face large-scale shortages or price hikes to deal with dwindling levels of supply.

At this point, we’re talking about 40-50% of the world’s fertilizer production being curtailed or outright shut down thanks to this war.

I’m not trying to fearmonger, but what other conclusion are we supposed to draw about this situation… even if peace is declared tomorrow, it will take months, if not far longer to unravel the damage that has been done. So, it’s already too late to salvage this year.

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Disclaimer

This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this video constitutes a solicitation, recommendation, endorsement, or offer by Green Investing to buy or sell any securities or other financial instruments in any jurisdiction.

All content in this video is information of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this video before making any decisions based on such information.

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Why Is Fertilizer In The News?

Roughly one-third of all seaborne fertilizer trade and nearly half of global urea exports travel through the Straight of Hormuz every year, and its closure has sent urea prices surging approximately 50% in under two weeks. Urea is a nitrogen-based fertilizer created from a reaction between ammonia and carbon dioxide.

The closure of the Straight thanks to the ongoing conflict between Iran and the USA/Israel is happening at the worst possible moment.

The Northern Hemisphere spring planting season is starting soon, so demand is about to peak as supply is being choked off.

Fertilizer producers like CF Industries (CF) and Nutrien (NTR) have seen their stock prices skyrocket as the war continues.

CF Industries is already up from $95 to $135 just in the span of the two weeks of this conflict so far. And we’ll talk about CF, as well as what other stocks benefit from this crisis, but first we have to go over why these stocks are starting to move…

It’s important to note that the Gulf countries produce ~49% of global urea exports, ~30% of global ammonia exports, ~30% of global phosphate exports, and 45–50% of global sulfur exports- sulfur being an essential input for phosphate fertilizer production. So, these are significant portions of the supply for nearly all inputs related to fertilizer production.

The country of Oman is the only Gulf producers with possible export routes outside of the Straight, so every other producer is effectively land-locked by the blockade created by Iran. Which doesn’t even have to be a literal blockade…

Just the threat of drone strikes, or mines laid in the sea is enough to ensure that most of the transportation vessels in the region will not try to enter or leave.

The creation of ammonia is a process that requires the usage of natural gas, and the Gulf countries are a source of incredibly cheap gas.

So, that’s why we find ourselves in this situation. And why there are so many fertilizer plants in the region. Natural gas represents 60–80% of ammonia’s variable production costs, making cheap gas the primary factor of consideration as to where to build a new fertilizer plant.

Middle Eastern producers pay $1–3/MMBtu for feedstock gas while European competitors, for example, pay $10–17/MMBtu.

That translates to a several-hundred-dollar cost advantage for fertilizers and makes producers simply unable to compete on price in other regions of the world.

Nitrogen fertilizers like urea are vital to growing crops like corn, which affect a variety of industries as as it used to feed roughly 40% of the livestock in the USA, and is used in around 90% of domestic ethanol production.

Nitrogen fertilizer accounts for ~59% of total global use, phosphate is ~21%, and potash is ~20%. About half of all fertilizer produced is consumed domestically and never enters international trade, making the seaborne trade that passes through Hormuz even more concentrated and critical.

The urea-to-corn price ratio, a key measure of farmer affordability, jumped from 75 bushels per ton in December to 126 bushels per ton by March 9th, approaching record levels and signaling that many corn farmers will lose money on every acre planted.

For fertilizer production, the closure of the Straight isn’t even the extent of the damage. Shortages of LNG will affect fertilizer production in countries like India and Bangladesh. The country of Bangladesh has already shut down 5 of its 6 fertilizer plants. Some of the Asian countries are heavily dependent on supplies from the Gulf states.

Investment Options

So, with all of that said, we know that the fertilizer industry is going to see large price spikes, as it has already… what stocks can we buy to benefit from this?

The key is going to be buying companies operating outside of the Middle East, obviously, but also producers that can access cheap gas without relying on imports from the region. The obvious winners in this scenario are producers in areas like North America, where there is plenty of cheap, unaffected natural gas production.

CF Industries (CF) — The clear #1 beneficiary

CF Industries is a pure-play nitrogen producer, operating the world’s largest ammonia production complex in Donaldsonville, Louisiana. Their total ammonia [production capacity is approximately 10 million short tons/year across facilities in Louisiana, Iowa, Mississippi, Ontario (Canada), the UK (Billingham), and in a Trinidad joint venture. Products include ammonia, granular urea, UAN, ammonium nitrate, and diesel exhaust fluid.

CF has a $4 billion joint venture targeting the production of 1.4 MT/year of blue ammonia, also under development in Louisiana.

Nutrien (NTR)

Nutrien is the world’s largest fertilizer company, covering all fertilizer inputs. They are the world’s largest potash producer (~20% global market share), a major nitrogen producer, and a significant phosphate player.

• Nutrien’s potash comes from six Saskatchewan mines with 20.6 million MT of nameplate capacity

• Nitrogen production guidance for 2026 is 9.2–9.7 MT from plants in Georgia, Louisiana, Ohio, Texas, and Trinidad.

• Phosphate guidance is 2.4–2.6 MT from North Carolina and Florida operations.

CVR Partners (UAN)

CVR Partners operates two nitrogen fertilizer plants in Kansas and Illinois.

The Kansas facility is the only North American nitrogen plant using petroleum coke gasification rather than natural gas, which insulates it more from gas pricing spikes. Combined annual capacity exceeds 800,000 tons ammonia and 1.3 million tons of urea ammonium nitrite.

Mosaic Company (MOS)

Mosaic is the world’s largest integrated phosphate producer with significant potash operations, as well. Phosphate capacity targets 6.9–7.2 MT from Florida and Louisiana facilities, while potash output targets 8.7–9.1 MT from Saskatchewan mines. Revenue runs approximately $12 billion annually. The problem with mosaic is that they produce phosphoric acid, which requires sulfur which has been soaring in price. So that is going to lead to more modest gains than other players in the space.

LSB Industries (LXU)

LSB is a pure-play North American nitrogen producer based in Oklahoma City, producing anhydrous ammonia, UAN, ammonium nitrate, and nitric acid with approximately 875,000 tonnes gross ammonia capacity annually.

Intrepid Potash (IPI)

Intrepid is a 100% U.S.-based potash producer operating solar evaporation facilities in New Mexico and Utah. Annual capacity is approximately 200,000–250,000 short tons of potash plus 150,000–200,000 tons of langbeinite, which contains potassium, magnesium, and sulfur.

So, besides the stocks mentioned already, there are a variety of potash producers or developers like Sage Potash, Brazil Potash, Buffalo Potash, and more. But we can’t cover them all, right.

The effects the closure of the Straight will have on fertilizer is in many ways worse than the oil and gas industry, since it’s not nearly as easy to come up with alternative sources of fertilizer. There are no strategic fertilizer reserves, this is capex-intensive industry or mining operations.

And even if the Straight reopens tomorrow, there is still damage from drone or missile strikes on various assets in the Middle East. It would take time to clear any mines in the Straight, production would need to be ramped up again. All of these issues would lead to sustained shortages for several quarters, if not longer.

It will be crucial to watch how things are unfolding in the region, especially following whether the conflict continues to escalate or parties begin to back off. We will see how it unfolds.

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Disclaimer

This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this video constitutes a solicitation, recommendation, endorsement, or offer by Green Investing to buy or sell any securities or other financial instruments in any jurisdiction.

All content in this video is information of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this video before making any decisions based on such information.

I plan to create content here again, and do so permanently, although I've been on hiatus for a bit.

As you are aware, the broader stock market has seemingly entered melt-up mode…

If you buy any ticker with a shred of hype around it, it’s been difficult to lose money.

That backdrop has been helpful. At the same time, the companies I’ve discussed for years have finally started to see meaningful share price appreciation through the achievement of many of their key milestones.

While they are often *theoretically* overvalued, my focus has been on finding undiscovered microcaps with capex-light business models, strong growth prospects, potential for durable moats, and prudent management teams.

This requires an almost unreasonable level of patience…

And risk-taking, as you will have to buy unprofitable companies if you want to find these qualities. If they were already profitable, then the stock wouldn’t be a microcap.

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Portfolio

Abaxx Technologies - ABXX (+298%)

Abaxx stock has been going vertical recently, just because of averaging enough futures contract volumes to generate a few million dollars of revenue a year, at best.

While volatile, trading has been ramping up. Josh Crumb provided an update on September 15th that the exchange had its first ~3,000 lot day. Abaxx had 1,938 lots trade for gold, and 987 lots for LNG.

If annualized, this would equate to ~$3.5 million in revenue for the exchange.

With volumes starting to ramp up, investors can see the writing on the wall. A few benchmark futures contracts and ABXX will be worth billions. The market is just starting to price that in.

Upcoming catalysts include:

• Continued ramp-up of trading volumes and onboarding market participants.

  • Abaxx has been making inroads in Asia, the largest region for LNG imports. Possibility for cross-border futures trading and collaboration with the commodity exchanges in China. Onboarding the major Asian and American players would essentially ensure benchmark status.

• Launching new weather futures, copper futures, cash-settled LNG futures, etc.

• Uplisting to the Nasdaq or other tier one stock exchanges.

• Foreign Board of Trade (FBOT) approval from the U.S. CFTC.

  • This will be a massive step forward as it will allow clients from the USA to access Abaxx markets.

• Pilots dedicated to showcasing FDT, MMF, and MineHub technological capabilities for tokenizing assets and modernizing commodity collateralization.

• Final, large raise to bring in strategic investors and finance the tech side?

Abaxx remains the largest position in my portfolio by weighting. I thought it was about as close to a slam dunk as you could get four years ago, and I still believe that now. Granted, it took a long time and a lot of volatility to reach this point lol.

Aduro Clean Technologies - ADUR (+503%)

Aduro is my second-largest position, and we’re up to a six-bagger here.

I figured we wouldn’t see much movement in the stock until they built out their second pilot unit, which should be operationally complete by the end of the year…

It turns out that the stock started to move before we even had any news on it.

The commissioning of the unit was scheduled to commence this month. With the expectation that the pilot will be able to recycle 8,000 tons of plastic waste annually.

In terms of what comes next… Aduro should have the unit operational soon; they will begin testing with various plastic feedstocks, and then we can expect some of their large partners to sign more concrete collaboration agreements.

Aduro is still in the Shell GameChanger program, and I would expect them to “graduate” after this pilot unit is operational.

TotalEnergies, Shell, GF Building Flow Solutions, and the other majors under NDA will certainly look to utilize Aduro’s technology if testing with this unit performs as expected.

It’s up to Aduro now— to prove the technology works at scale.

eXoZymes - EXOZ (-28%)

eXoZymes is a position that I haven’t really discussed before. This is a small position (5% weighting) that I’m waiting on to see if the company continues to deliver as Aduro and Abaxx have.

This company is developing a cell-free biomanufacturing process that can be used to produce pharmaceuticals, biofuels, and other chemicals.

The range of potential benefits of this technology is too long to list in a small update, but if the technology is proven out… this is a revolutionary process.

I strongly recommend reading Slack Capital’s extensive write-up on the company.

EXOZ has over 100 active NDA discussions with companies interested in using their technology.

Notably, like Aduro, eXoZymes is in the Shell GameChanger (GCxN) program run in collaboration with the US Department of Energy’s NREL division.

Over the years, they have received non-dilutive grant funding from:

• The National Institutes of Health (NIH)

• The U.S. National Science Foundation (NSF)

• The U.S. Department of Energy (DOE)

• The National Renewable Energy Laboratory (NREL)

• The U.S. Department of Defense (DOD)

I think seeing the large interest from parties like this, at least warrants a starter position to see how they progress over the next few years.

Watching

Zefiro Methane - ZEFI

If you want exposure to the carbon markets with a business model that can actually scale… Zefiro is likely going to be the best bet. This is one I’m still watching.

Zefiro Methane is a provider of well-plugging services for orphaned oil and gas (O&G) wells.

As I pointed out in a previous post, the stock IPO’d at a rich valuation. And the stock has subsequently suffered from a lack of initial results and the exercise of cheap warrants.

Catherine Flax has been appointed as interim CEO to turn this ship around. So, we’ll see what results the change in leadership will have over the next few quarters.

Sold Stocks

Base Carbon - BCBN

I made a previous post about how I sold Base Carbon in the past, but I figured it was worth mentioning again here.

This company has been run exceptionally well and is a glimmer of hope in an industry that is often plagued by failures. Aka the carbon markets.

Of course, as soon as I sold the stock, it proceeded to run up ~100%.

That’s why I try to make as few changes as possible in my portfolio. I swear, whenever I make a move, the market wants to make sure I know that I’m a fool.

As I mentioned previously, Base was a small position for me, so I’m not going to lose sleep over it. But I do hope the company continues to perform.

Ultimately, I needed to sell something, and I will prioritize growth companies over value companies.

For a variety of potential reasons, Base has been unable to expand its carbon credit project portfolio for years. This is a firmly a value stock, with relatively limited growth prospects, in a deeply unpopular industry. Granted, it is certainly undervalued.

As much as the industry fascinates me, if I have to choose… I would rather go where the growth is. And I suppose that has worked out so far.

This is not to say that Base can’t do well, but it seems unlikely that Base’s stock price will skyrocket like Abaxx's or Aduro’s can.

Northstar Clean Technologies - ROOF

It’s worth mentioning that I have sold Northstar as well. Again, this is not to say that I necessarily think the company has done anything wrong. I needed cash lol.

They have been slightly delayed on the operation of their first asphalt shingle recycling plant, but that is to be expected for a new technology, ramping up for the first time.

Other investors have sold due to a bit of a sleazy capital raise that was conducted below market and closed to most investors…

I can see why it’s a red flag.

There were initial signs of management self-serving when they re-priced their own options back in May 2024.

Management information circular (keyword search for re-price).

They amended the exercise price of their options from $0.35 to $0.21 (CAD) when it didn’t appear they would reach their desired share price.

I was personally willing to overlook that and not think much of it, but this raise was a pretty bad one. If you’re not on the management team ;)

Either way, I had already sold before needing to decide whether I would stomach that type of raise or not.

There is a difference between these companies rewarding themselves for their performance… or simply giving themselves free money.

I’ll probably just maintain higher ownership stakes in what I think will be higher-growth opportunities, avoiding buying back into Base or Northstar.

The owner of Green Investing is not a licensed investment professional. Nothing produced under the Green Investing brand should be construed as investment advice. This content is made for entertainment and educational purposes. Do your own research.

Transcript

MP Materials is one of the two large producers of rare earth metals outside of China, with the ticker MP, listed on the NYSE and a market cap of around $10 billion

In this video we will review the rare earth metals markets, the geopolitical tensions there between the United States and China. As well as the investment fundamentals of MP Materials, whether it’s worth taking a position in.

The rare earth elements, or metals, consist of the 17 various materials listed on the screen. They are used to create a variety of different crucial products. Aerospace components, superconductors, batteries, magnets, nuclear reactor control rods. It’s obvious why we need these materials.

The problem? China dominates the production of these metals. The entire supply chain is controlled by the Chinese. China produces around 60-70% of the supply of these crucial resources. The country owns an even larger percentage of the refining and processing capabilities. So, the West is dangerously dependent on China. Who can shut off exports at any times. As they have for some of these materials in the past.

Just a few months ago, China imposed export restrictions on seven medium and heavy rare earth metals. This was the cause of tense negotiations as China has essentially been holding the global economy hostage with its near monopoly over these industries.

Inevitably, neither the United States nor China can afford to let restrictions like that last for very long, so they recently reached a deal to mutually roll back retaliatory trade actions. So, China will resume supplying these rare earths to the West again.

But these tensions have made it clear that the United States is vulnerable, so we have been making investments to increase production outside of hostile nations like China. That’s where MP Materials comes in.

And that is exactly why the U.S. Department of Defense just signed a multi-billion-dollar commitment deal with MP Materials for a magnet production facility in the United States. This includes pricing floor guarantees for when buying the magnets, an offtake agreement, and a $400 million investment in MP’s stock. As of July, the DoD is now the largest shareholder of the stock, holding 15%. That magnet facility is expected to be completed in 2028. So, the United States is clearly committed to developing new domestic rare earths manufacturing capabilities. This trend is what makes MP such an interesting stock.

The company’s central goal is to become a scaled and vertically integrated rare earths producer, operating across the entire supply chain from mining the metals to producing finished products, aka the magnets used in munitions, electric vehicles, and more.

The company operates the Mountain Pass rare earths mine in California, situated in the Mojave Desert. The mine was previously owned by Molycorp until MP Materials took over control in 2017. MP bought the mine out of bankruptcy for $20 million. And since it has upgraded many of its operations and equipment, since this mine has been in operation since the 1950s.

Since there are 17 different rare earth metals, all of them with different supply and demand fundamentals… it’s important to know which metals this mine tends to find. The best approximations I could find were from 1980 estimates, so it may have changed slightly by now. But this is the best I got.

The mine is incredibly high-grade for a rare earths deposit. Grade, meaning how much ore can be found in the rock, on average. The grade of the ore body at Mountain Pass is approximately 6-8% total rare earth oxides (or TREO). This is significantly better than other global deposits, which typically range from 1-2%, and if not lower. Mining grades continue to decline as we have already mined out a large amount of the high-grade deposits around the world in the past. So, this is a great deposit.

Estimates from the 1980s tell us that the approximate percentage of the rare earths in the mineral body are as follows:

• Cerium is 50% of the TREO found in the mine

• Lanthanum is 34%

• Neodymium is 11%

• Praseodymiun is 4%

• And all of the other metals are around .5 percent of the ore or less

While many of these metals are valuable, our focus is primarily on the neodymium and the praseodymium, or NdPr. Because those metals combined are used in the magnets that the company plans to produce as part of the Department of Defense investment.

The production ramp up of Mountain Pass was laid out in a three stage plan:

1. The first stage was mining rare earth concentrate at a majority rare earth oxide content. All of that ore was originally being shipped to the Chinese company Shenghe Resources, which is actually a minority shareholder in MP. Those metals were being separated in China, but those shipments have now been halted. So, revenues will decline temporarily.

   1. Their goal is to mine 15,000 metric tons of rare earths from Mountain Pass, per quarter. Which they are getting relatively close to doing with 12,000 being produced in Q1.

2. The second stage was creating midstream operations to separate and refine the rare earths themselves. Which is now being done with the NdPr oxides for magnets. Their annual production target is to output 6,075 metric tonnes of NdPr oxide.

3. The third and final expansion stage is underway, taking NdPr oxide to produce neodymium-iron-boron alloy for magnets. Which they will be manufacturing in-house, at a facility in Texas.

MP has already started delivering NdPr metal and is expected to start producing finished magnet product by the end of this year. The initial facility, called Independence, will target a production capacity of 1,000 metric tons per year of magnets.

The 10X facility, which they have yet to determine a location for, will be much larger, increasing production capacity to around 10,000 metric tonnes per year. That is estimated to begin commissioning in 2028.

Transitioning from the lower end of the supply chain, just selling raw ore, to selling refined products like magnets… makes MP more interesting. They can probably receive higher margins depending on how things play out. Especially with a pricing floor from the Department of Defense.

When it comes to partnerships, MP has obviously been making strides with the Department of Defense since securing a rare earths supply chain is a matter of national security. But they have also made separate agreements with both General Motors and Apple.

General Motors is an offtaker for alloy and magnets from the initial Independence magnet facility.

Apple has also partnered with MP in a $500 million deal for magnets from that same facility. And establishing a supply chain for recycling old magnets at the Mountain Pass mine.

Further emphasizing this company’s importance, they are now working with high-profile companies seeking to localize the supply of key materials.

MP has also signed an MoU with the Saudi Arabian mining company Maaden. The largest mining company in the middle east, owned by the Saudis. They are going to work on developing a rare earths supply chain within Saudi Arabia. So, those could be some valuable joint ventures to establish another source for supply from a friendlier region than China.

In terms of valuation… significant growth is likely priced in at this point. Going off their slides they were estimating at least $650 million in EBITDA when Independence and the 10X magnet facilities are up and running, after ramp up. So, that would be in 2028 to 2029.

There will likely be additional growth opportunities from now until then, but going off today’s market cap of around $10 billion. Enterprise value is pretty similar, so an EV/EBITDA of 15x. And that is based off of projections for several years from now. What multiple MP Materials deserves… who knows. Your guess is as good as mine. This is a pretty unique situation.

We’re talking about a producer that mines around 10% of the world’s supply of some of these critical metals that are important to a variety of supply chains, located entirely in a safe jurisdiction in the United States. If you know of any comparables like that then feel free to post about it in the comments below.

Lynas Rare Earths, the other large rare earths producer outside of China is trading at quite high multiples. They are not generating very high profits yet either.

But your standard mining company like Rio Tinto or Barrick Gold trade at EV/EBITDA multiples of around 5-6. Yes, MP is a unique situation, but it’s not cut and dry whether you should be buying the stock or not after it has increased drastically. It could continue to do well, of course, but the stock has already moved up dramatically.

The stock has already doubled in price from when I made my video on rare earth mining investment options in June. Just a month ago.

Talking financials, things are going to take a downturn. As I mentioned earlier, MP has ceased all shipments of rare earths to China for processing, so they have to ramp up those operations on U.S. soil.

But before that even takes effect, we have the results from the first quarter of 2025. Revenues were around $60 million. After you account for cost of sales, SG&A, as well as depreciation, depletion, etc… MP was operating at a loss. Total operating expenses came in at $95 million. This resulted in a net loss of $22 million for the quarter.

It seems like financial results will be shaky until they start producing magnets in large numbers. But that’s why they have a solid balance sheet.

Total cash reserves and short term investments added up to $760 million. That does not include the recent raise that MP just did. On July 17th, MP is taking advantage of the run in the stock price to raise $650 million through a public offering. A great idea considering how much the stock has moved. But dilution risk is still high as MP is using their high stock price to fuel expansion.

The total liabilities were at $1.3 billion. Most of that being long-term debt at $850 million, which is maturing years from now. So, the company is doing well when it comes to the balance sheet. They have various sources they can receive funding from, whether that be raising money from the market or receiving funding from several different partners.

MP is also going to receive $1 billion in a committed financing facility from Goldman Sachs and JP Morgan, which should fund all planned capex for the 10X magnet facility.

With all of the positive aspects to the business being said, they have a lot of momentum on their side. Great growth prospects. But I think the valuation is getting extended here, as it likely already was before the stock jumped 100% since I talked about it last month.

Does that mean the stock won’t move up even higher… certainly not. We’re talking about strategic assets getting government support and a significant amount of news coverage. So, of course the stock could keep climbing. But I think it’s risky to say that MP Materials is a no-brainer buy at a $10 billion market cap. We’re pricing in years of growth, even if we assume they will trade at a far higher multiple than the industry standard.

We’ve seen with the nuclear energy stocks that valuations can get out of hand for years, and stay that way, but on the flip side if we see the stock market start to drop broadly… then an unprofitable mining company with significant capital expenditures is not going to perform well. So, these are situations I just tend to avoid, personally. But deciding what investments to buy is, as always, up to you.

General Environmental/Regulatory

• President Trump announced sweeping new tariffs invoking emergency powers, imposing a 10% baseline tax on all imports and much higher rates on major trading partners like China (34%) and the EU (20%) aimed at promoting U.S. manufacturing and achieving trade "reciprocity." This significant tax increase, bypassing Congress, risks triggering broad trade wars, disrupting global supply chains, and causing substantial inflation for American consumers and businesses, potentially leading to an economic slowdown.

• The European Parliament voted decisively on April 3rd, 2025, to approve delays in the implementation of key EU sustainability rules, namely the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). This proposal postpones the CSRD application by two years for companies not yet reporting and the implementation of CSDDD by one year. The delays are part of a wider push, known as the Omnibus I package, aimed at significantly reducing the regulatory and reporting burden on companies, especially smaller ones, potentially shrinking the scope of required disclosures considerably.

• The US Department of Energy is proposing to dismantle its Office of Clean Energy Demonstrations, cutting approximately $9 billion in awards for projects focused on carbon capture, direct air capture, solar, battery storage, and several regional hydrogen hubs. A final decision on the proposal could be made as early as next week.

Battery Metals

• Russia and the United States have initiated discussions regarding potential joint projects focused on rare earth metals and other resources within Russia. Some American companies have already expressed interest in these potential Russian projects. Further discussions on this cooperation might take place during the next round of Russia-U.S. talks, potentially scheduled for mid-April in Saudi Arabia.

• Responding to new U.S. tariffs, China implemented export controls on several key rare earth elements and related products like magnets starting April 4th, 2025. The country is set on tightening its grip on minerals crucial for Western defense, electronics, and EV industries. While stopping short of a full ban, the controls allow Beijing to restrict shipments via licensing and are seen as a significant escalation in the U.S. - China trade dispute.

Biofuels/Chemicals

• The US Department of Agriculture announced the release of $537 million in federal grants for 543 biofuel infrastructure projects across 29 states, combining nearly $260 million in new Trump administration commitments with previously obligated funds. Distributed through the Higher Blends Infrastructure Incentive Program (HBIIP), the funding aims to boost sales and consumption of ethanol and biodiesel by helping companies install or upgrade pumps, storage tanks, and blending equipment for higher biofuel blends.

Voluntary Carbon Markets (VCMs)

• Singapore's first government tender seeking high-quality, nature-based carbon credits garnered significant market response, attracting nearly $1 billion (S$1.3 billion) in total bids from 17 different submissions. Commodity trading giants Trafigura and Mercuria Asia Resources placed the largest bids for the credits, which must be delivered by February 2031 and meet criteria including alignment with Article 6 of the Paris Agreement. Following the strong interest in this initial round, the government intends to launch a second tender for at least 500,000 additional nature-based credits later in 2025.

Hydrogen

• A new analysis from Westwood Global Energy Group suggests Europe is unlikely to meet its 2030 hydrogen production targets, projecting that only 17% of the planned EU project pipeline will materialize by then without significant market intervention due to regulatory delays, high costs, and weak demand. The report indicates a similar challenge for the UK, estimating only up to 24% of its pipeline might be realized.

• Major oil companies, including BP dissolving its mobility team and Shell closing its California stations, are significantly scaling back or exiting hydrogen initiatives for transportation. The author contends this retreat isn't due to market immaturity but stems from the fundamental economic and practical challenges hydrogen faces against battery-electric solutions for both light-duty vehicles and heavy trucking. While some firms like TotalEnergies continue building subsidized infrastructure and others like ExxonMobil focus purely on industrial hydrogen production… the broader trend suggests the oil majors see little future for hydrogen as a widespread transportation fuel. The piece concludes that hydrogen's realistic application lies primarily in replacing existing industrial feedstocks, not in powering the movement of people and goods.

Liquified Natural Gas (LNG)

• The U.S. government is set to rescind a Biden-era policy that mandated new LNG projects begin exporting within seven years of receiving regulatory approval. This policy, implemented in April 2023, faced opposition from the LNG industry, which argued that many projects require longer development times. Under the new approach, the Department of Energy will revert to its previous practice, considering requests to extend the export commencement deadline on a case-by-case basis for good cause.

• The United Nations’ International Maritime Organization (IMO) is meeting in London over the next two weeks to discuss a potential levy on greenhouse gas emissions.

  • Shipping giant Maersk is warning that a proposed global emissions trading scheme (ETS) could promote the use of LNG over greener alternatives. The Danish company contends that the plan fails to adequately penalize LNG emissions, potentially making it a cheaper option for shipowners compared to truly low-carbon fuels like green methanol.

Nuclear Energy

• The North American uranium market is experiencing a significant slowdown as U.S. nuclear power companies pause purchases and delay new contracts due to the uncertainty surrounding potential tariffs on Canadian imports threatened by President Trump. Heavily reliant on Canada for fuel, US utilities are hesitant to commit while awaiting clarity on the scope and timing of the levies.

• A Texas state representative has introduced legislation proposing $2 billion in taxpayer-funded incentives to revitalize the state's long-dormant nuclear power industry by offsetting costs and encouraging the construction of new plants. The bill (HB 14), aims to establish a dedicated state office and provide grants to new nuclear developments.

Investment Funds

• Japan's Government Pension Investment Fund (GPIF) has introduced a comprehensive new policy prioritizing sustainability-focused investments, incorporating ESG and impact factors across its extensive portfolio. As a "universal owner," GPIF believes reducing sustainability risks and fostering sustainable corporate growth are crucial for overall market stability and its investment performance.

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General Environmental/Regulatory

• The SEC has announced it will no longer defend its climate disclosure rules in court, effectively halting enforcement and leaving the rule’s future in limbo. The rules, introduced in March 2024 to require public companies to report climate risks and emissions, had faced multiple legal challenges. Without SEC backing, courts could now strike down the rule without the agency formally rescinding it.

• Republicans are considering a “thoughtful” phaseout of clean energy tax credits from the Inflation Reduction Act (IRA), rather than a full repeal. House Budget Chair Jodey Arrington (R-Texas), once a vocal critic of the credits, now suggests a gradual transition to avoid disrupting markets. The shift comes amid internal GOP tensions, as nearly two dozen Republicans have expressed support for preserving the credits due to local economic benefits. With limited climate funding to cut, Republicans are reassessing their approach as they work to offset the cost of extending the 2017 Trump-era tax cuts in the upcoming reconciliation bill.

• A new PwC report reveals that 84% of companies are maintaining or accelerating their climate commitments, despite economic uncertainty and evolving regulations. Sustainability efforts are delivering financial benefits, with eco-friendly products earning 6% to 25% more than conventional ones, and smaller businesses are increasingly joining the decarbonization movement due to supply chain pressures.

Battery Metals

• J.P. Morgan has upgraded the mining and metals sector to “overweight,” citing a projected rebound in commodity prices and improving fundamentals, especially in copper. The firm expects a V-shaped recovery driven by China’s recent economic stimulus measures and tightening supply-demand dynamics, with copper forecast to rise 15% to $11,500/ton by Q2 2026. Mining equities have significantly underperformed since 2023, creating a valuation gap that J.P. Morgan sees as a strong upside opportunity.

• Rebels from Myanmar’s Kachin Independence Army (KIA) have seized control of rare earth mines producing about half of the world’s heavy rare earths, significantly disrupting supply chains and driving up prices, especially for terbium oxide. The KIA is using these resources to pressure China, which supports Myanmar’s military junta and relies on these mines for critical minerals used in EVs and wind turbines. India has shown interest in stepping in but faces logistical and processing challenges.

  • There are conflicting reports, Reuters states that the rebel group will allow the exportation of rare earths minerals to China.

• Tin prices surged after an earthquake in Myanmar raised concerns about delays in restarting mining operations in Wa State, which produces 70% of the country’s tin. Although the quake’s epicenter was over 400 km from the mining region, speculators drove prices up 2.5% to $36,140 per metric ton. Myanmar is a major tin supplier to China, and ongoing production suspensions since August 2023 were already tightening global supply. Combined with a halt at Alphamin’s mine in the DRC and low LME inventories, the market remains highly sensitive to any disruptions.

• Some of the battery metals like cobalt and lithium have had their prices experience precipitous declines after EV demand fell off. Firms like Goldman Sachs are starting to predict that lithium might have bottomed here or in the near future. See the chart below:

Biofuels/Chemicals

• IATA has launched the Civil Aviation Decarbonisation Organisation (CADO) to operate its upcoming Sustainable Aviation Fuel (SAF) Registry, aiming to create a transparent, global system for tracking SAF use and claims. CADO will be an independent body that is open to all SAF value chain stakeholders.

Carbon Capture

• Shell, Equinor, and TotalEnergies will invest $714 million to expand their Northern Lights carbon storage project in Norway, following a 15-year deal with Stockholm Exergi to store 900,000 tonnes of CO2 annually. The expansion will more than triple the facility’s capacity to 5 million tonnes per year— roughly 10% of Norway’s annual emissions. The investment also includes €131 million in funding from the European Commission, signaling strong EU support for large-scale carbon capture and storage (CCS).

Compliance Carbon Markets (CCMs)

• China will expand its national carbon trading market to include the steel, cement, and aluminum industries, adding around 1,500 new firms to the scheme. This move will increase the program’s coverage to 8 billion metric tons of CO2, over 60% of China’s total emissions. This makes it the world’s largest carbon market by volume.

• Mexico is set to bring its emissions trading system (ETS) online by the end of the year. The system will include the usage of carbon offsets. Details are scarce because Carbon Pulse is paywalled for institutional clients only.

Voluntary Carbon Markets (VCMs)

• The Science Based Targets initiative (SBTi) has released a draft update to its Corporate Net-Zero Standard (CNZS), firmly limiting the use of carbon credits for Scope 3 emissions, emphasizing instead internal decarbonization and action-based targets. The move follows internal dissent and external criticism over earlier proposals to expand carbon credit use. While carbon credits remain part of recommended “beyond-value chain mitigation” strategies, they can no longer be counted toward core abatement goals. The final publication of the standard is expected in 2026 following pilot testing and further consultation.

Liquified Natural Gas (LNG)

• U.S. natural gas demand is projected to remain at record highs through 2026, fueled by booming LNG exports and rising electricity consumption from new data centers. The U.S. remains the world’s top gas producer, but a lack of pipeline infrastructure is creating bottlenecks, driving up electricity costs and limiting supply delivery. EQT and ONEOK emphasized that pipeline investment is lagging, with projects like the Mountain Valley Pipeline taking years and billions over budget to complete.

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Most people are… because Substack does an awful job of documenting what running a paid newsletter is like on the backend… it wouldn’t surprise me if that was intentional.

At least from my experience, there are two primary issues:

1. Churn.

2. Sales taxes.

For those interested, I will elaborate. If you’re not, then feel free to skip around the next two sections.

1. Churn

Subscriber churn is a fact of life for a subscription business, but the stats can be shocking on Substack.

Sacra, a private markets research platform, estimates the average churn on Substack was around 50-60% of a newsletter’s revenue on an annual basis (in 2022):

Given so many people are starting to develop subscription fatigue, that average might be even higher today…

So, to make the same amount of money you were making a year ago— you need to increase your paid subscribers by over half your existing sub count.

Churn rates can vary, but everyone posting on this platform reports a similar situation.

People don’t view these informational newsletters like they would a SaaS product.

Many subscribers will pay for 1-2 months and leave. Some might come back later to consume the latest content, others don’t.

Don’t get me wrong—the high churn rates on my newsletter are my own fault. I naively thought that only discussing the stocks I was personally buying was a viable strategy for a subscription-based investing newsletter… it’s not.

Especially when I run a highly concentrated portfolio.

I figured if I offer news coverage in these industries and stock lists and kept adding on other additional content, then maybe that could counterbalance things out. No. That just diluted the service since I wasn’t focusing on the core product.

It turns out that people are subscribed to an investing newsletter primarily for stock picks. Other services are nice but not enough to merit a subscription on their own…

Truly a shocking revelation, I know.

But after reading about the experiences of others, I realized that even if I did dramatically increase the number of investment reports I put out, that wouldn’t change the fact that subscriber churn is significant on this website.

2. Sales Taxes

This is a topic that Substack hardly addresses at all.

The only way most people would figure out that Substack doesn’t handle sales tax collection or remittance for you is by specifically searching that out.

Other platforms provide detailed instructions about this, Substack doesn’t. The only information they have on the subject is one page about integrating with Stripe Tax.

Substack was the first platform I tried to monetize on, and I didn’t research any of the other options, so I was unaware of this issue.

A common theme you will see on the Substack subreddit is a variety of disgruntled writers talking about how they had no idea this was a thing.

I didn’t know either— until tax season came around and I realized that I never received any warning from Substack or Stripe about registering to collect sales taxes on behalf of several countries. Something I hadn’t been doing for over six months.

It’s safe to say I wasn’t pleased when I figured all of this out.

Registering with foreign governments to collect a tiny amount of sales or VAT taxes became an unsurprisingly burdensome administrative nightmare.

Plenty of countries will require you to register with their tax authorities just for making a single sale of a digital product or subscription to one of their citizens.

It’s worth noting that Stripe acquired Lemon Squeezy last year, which is similar to Gumroad and offers an MoR solution themselves. The specified purpose of said acquisition was to eventually have Stripe offer an MoR solution. So, it’s coming, but who knows how long it will take for them to develop it— and if Substack will even integrate it once it’s ready…

The Solution - Gumroad

If you haven’t heard of Gumroad before, it’s an incredibly popular option for online content creators looking to sell digital products. Which is exactly what I plan to do.

Instead of offering a subscription service like most of the newsletters on Substack, I’m going to sell each of my investment reports individually on Gumroad. Each report will be sold on its own in PDF format.

This will allow you to pick and choose which investment reports you want to buy instead of purchasing a monthly or yearly, broad subscription.

If I need to take a break for some reason, or if I don’t have a great stock idea in a particular month… then I don’t have to post anything. Subscribers won’t be annoyed that they paid for a month and didn’t receive enough value (totally fair).

Additionally, Gumroad is a Merchant of Record (MoR) now, meaning they handle all of the global tax registration and collection for me. So, I can focus on researching stocks instead of dealing with bureaucratic BS whenever I sell a subscription in a new country.

In summary, Gumroad offers more options for you— and less headaches for me.

Substack

I will continue to post free content on Substack. Any news trends or industry analysis will still be posted on here.

The Green Markets series will also be making a comeback. Instead of being posted daily, it will be sent out weekly, where I only focus on news that could impact businesses across an industry. Not just individual company news.

Existing and previous paid subscribers should receive a second email discussing refunds.

I plan on providing a link to my Gumroad page when I have some products on there. I’m still in the process of transferring things over.

Transcript

Traditionally, if you wanted higher returns through a bet on gold then instead of just buying the metal itself, you need to buy gold miners.

But there are various risks there…

• Operational issues are common in mining.

• Building a mine is incredibly expensive and time consuming.

• Most mining companies ultimately fail because of how challenging it is.

Those are just some of the issues.

So, the natural solution to this has been buying royalty companies instead. By owning gold royalties like Franco-Nevada does, for example… you get exposure to gold mines without dealing with most of these risks.

At this point, the commodity royalty space has matured, so the returns likely won’t be as great anymore. But there is another capex-light option I think more investors should take a look at…

Abaxx Technologies (ABXXF) is the parent company with approximately 90% ownership of the Abaxx commodity futures exchange and clearinghouse in Singapore.

Exchanges represent an even better capex-light opportunities than royalties, because all of the costs of building the exchange are behind them now. At this point, Abaxx just has to onboard more participants to trade, they don’t need to deploy any additional capital to buy more royalties and bet on whether a mine might produce gold or not.

Abaxx launched the exchange in the summer of 2024, so they are still ramping up the exchange and onboarding more trading or clearing firms. At this point, they have launched LNG, carbon credit, and nickel sulfate futures contracts.

Recently, they announced they would have 3 lithium carbonate contracts launched on March 7th, with delivery points in Singapore, Rotterdam, and Baltimore.

Albemarle has agreed to onboard and trade its lithium on the exchange as the first approved brand. That company is the second largest producer of lithium in the world, so that is a great start.

A large focus of the company is on launching new battery metal or environmental contracts. But the next one after lithium will be gold.

By investing in Abaxx, if their gold contract takes off, then we as investors benefit from the volatility in gold markets when contracts are traded on the exchange. The more volatility in the futures prices, the more contracts traded, and the more revenue an exchange makes. So, Abaxx would offer exposure to changes in the price.

The contract will be a combination of both a futures market and a spot market for gold kilo bars in Singapore. It has been mentioned that major bullion banks want to see a similar market created in New York after they launch this one in Asia. But for now, the first version will just be in Singapore.

Unlike other contracts they have designed, gold is a market that is already dominated by large competitors. LNG, carbon credits, and nickel sulfate are still markets that lack any physically-settled benchmark contracts.

There are already existing benchmark gold contracts with the COMEX in New York, owned by the CME Group and the London Metals Exchange (LME) in the United Kingdom.

The London markets typically serve as a spot market where commodities stand for immediate delivery, meanwhile the COMEX dominates the futures market for gold.

Having those two, separated markets has typically been fine, but prices started to diverge with supply chain disruptions during 2020, and changing policy like tariffs could lead to further differentials.

This has led to growing interest for a centralized gold price, with both futures and spot markets located in the same place. That is what Abaxx is setting up in Singapore.

As I mentioned earlier, the CEO of Abaxx, Josh Crumb, has talked about how bullion banks want a similar system in New York. So, even with the COMEX already there, interest is starting to come in for Abaxx to create similar products abroad.

Additional validation that the contract might get some legs is that Abaxx has a former chairman of the London Bullion Market Association working with the company to design the futures contract and spot market. Along with collaborating with market participants, as the company has when creating previous contracts. So, there’s a good chance Abaxx has confirmed that the market wants to trade what they are designing in the gold space.

Now, in addition to the COMEX and the LME, there are also existing, competitive gold contracts in the Asia region. Particularly the Shanghai Futures Exchange (SHFE) and the Shanghai Gold Exchange (SGE) in China, as well as the Tokyo Commodity Exchange in Japan. While China is difficult to get access to as a trader outside of the country, Japan is certainly accessible.

Point being, gold is a competitive market. So, how does Abaxx hope to garner a foothold and gain market share?

Primarily through technological innovations.

I’m not going to explain in-depth about how the technology works in this video, you can check out my write-up on Abaxx to read more about it, link in the description. I’ve already explained it a few times, so I won’t get into it again.

But essentially what Abaxx hopes to do is to create what they call Full Digital Title (FDT), by using blockchain technology. Their technology will allow them to immediately transfer ownership of a commodity to the buyer, allowing for instantaneous trade settlement. As of right now, transactions in the financial and commodity space typically take days to settle.

Even better, tracking everything through smart contracts and the blockchain eliminates the risk of fraudulent transactions. Which has been an issue in the commodity industry because they have been slow to adapt to new technologies. Every gold bar will have a unique ID, which can be easily tracked to ensure that every gold bar is where people say they are. This also allows firms to use that gold as collateral, since every transaction is being tracked and verified, and settling instantly.

You could also see Abaxx allow firms to settle trades in Gold instead of fiat currency if they wanted to, which is not a thing on any other exchange.

As a new exchange and clearinghouse, Abaxx can utilize technologies that other exchanges couldn’t dream of using right now. The company built up its own tech stack for this reason.

So, Abaxx’s advantage over the incumbents is their location, Singapore and Asia at large has been the region driving demand for gold. The other advantage is that they built the exchange from the ground up with technological progress in mind. Even if a market is already saturated with existing futures contract benchmarks, Abaxx might be able to make inroads through offering new technologies.

Something else to take note of is that Abaxx recently established new offices in Hong Kong and Beijing. They did not do that for shits and giggles.

Chances are, they will likely work with an exchange like the Shanghai Futures Exchange to offer cash-settled contracts and spreads based on the contracts offered within China. As I mentioned earlier, there are a variety of restrictions that make it difficult to trade futures products in China when you are outside of the region. So Singapore could act as an intermediary for trading firms.

So, new events to look out for over the next year are:

• The lithium contract, which should launch soon.

• The gold contract and spot market, which shouldn’t be far away either.

• After gold, it seems like the next contract coming up will likely be related to copper.

• Beyond those futures contracts, we also have the potential cash-settled contracts and spreads.

• Additionally, Abaxx could start offering third-party clearing services through its clearinghouse for existing exchanges.

• There’s also plans for Abaxx to elaborate further and their plans for Full Digital Title and the technology development roadmap in 2025.

While it is unclear how much market share Abaxx will ultimately capture with these efforts… the company has entered its growth stage. The network effects continue to grow as more clearing members are onboarded, and trading firms start to use Abaxx contracts.

This is an investment we need to be patient with, as it takes time to build out these markets and attract liquidity. But the management team is experienced in doing just that. So, I’m not all that worried about whether or not Abaxx will succeed. In my opinion… the main question is how long it will take.

Transcript

Back in May 2023, I made a video detailing why Nikola, the hydrogen and battery truck manufacturer, was an extremely risky investment.

At the time, I received some of the standard comments about how if I talk negatively about a stock… I must be a short seller. Even though I never short stocks.

One person even implied that I sounded scared in the video, and that I should cover so I don’t financially ruin my family.

And of course, about two years later, we just got news of Nikola filing for Chapter 11 bankruptcy.

The point of this video is not to dunk on investors that lost money on this stock, but to point out the obvious flaws of a company like Nikola.

Avoiding companies that are likely to go bankrupt like this is not rocket science.

When investing in stocks, we are playing a game of probabilities.

What is the probability of success or failure, depending on a variety of factors. The opportunities that most people tend to focus on are profitable and growing companies, but depending on the situation, those have lower reward potential.

I am not against buying unprofitable companies… most of the companies I own are unprofitable. But we can dramatically increase our odds of success if we avoid buying unprofitable companies that require high capex spend.

That is the ultimate question, if a company is unprofitable… we need to have a good sense of how long it will take them to reach profitability. And how much it will ultimately cost.

Just over the span of 2022 and 2023, that cost Nikola around $1.3 billion. The company also never earned a positive gross profit. So, even when they began to sell vehicles, they were losing money on every sale.

Obviously, that is an unsustainable situation. It’s no surprise they went bust.

If you have been following the stock market over the last few years, you could see how most capex-intensive investments are ultimately going to fail.

We have seen this happen time and time again, especially in the electric vehicle industry.

In many cases, it takes billions of dollars just to get a manufacturing facility up and running. All of the hiring, all of the design work, all of the equipment required… scaling these plants is incredibly expensive to do.

This requires increasing levels of stock dilution, which destroys your ability as an equity holder to even get back to breakeven. Every new share issued makes your initial stock purchases less valuable.

Not even including more recent dilution, Nikola 3.5x the outstanding share count from February 2021 to February 2024. From 391 million shares to 1.3 billion shares.

Anyone that bought the stock in 2021 could consider their investment a zero. Even if Nikola was a success, it would be incredibly difficult, if not impossible for you to make your money back with that level of dilution.

The company was able to ramp up production of trucks relatively fast after the debacle with the company’s founder Trevor Milton. Who lied about basically everything the company was doing, and there wasn’t even an actual working prototype back in 2020. But like we mentioned before, if you can’t even turn a gross profit on those truck sales then selling trucks doesn’t even matter.

Profitability issues were exacerbated by operational issues with production. Nikola acquired Romeo Power, a battery pack manufacturer, and later sold the assets to Mullen Automotive for pennies on the dollar.

Mullen’s initial purchase of some Romeo Power assets was for only $3.5 million, and the rest was acquired from Nikola later on for an undisclosed amount. This is a far cry from what Nikola originally bought the assets for through a $144 million deal in shares.

The sale of those assets was likely spurred on by the recurring battery fires in Nikola trucks. This led to the recall of 209 battery-electric vehicles. Which only made the company’s financial situation even more dire.

And this is probably only the tip of the iceberg on their operational issues.

It’s not surprising that the company encountered these problems, because again, this happens all of the time in these industries. There are better industries than others when it comes to investing. EVs, and even regular combustion engine vehicles are one of the bad ones.

On screen you can see a list of all of the failed auto manufacturers in just the United States alone. It’s not a good sign to see that there is this level of competition, and especially that this many companies have gone out of business over the last century.

The reality is, while the total addressable market (TAM) can be large in industries like this… an extremely low amount of companies will survive the massive spending cycles they need to make to increase production of new vehicles.

And with so many competitors, profit margins are razor thin. That is why, as an investor, you want to find companies that can dominate industries with an outsized portion of the total market share. It’s unlikely you will pick the winner in such a disputed industry like EVs.

Large amounts of competition are good for consumers, and bad for the producers of goods.

Another problem for the larger EV space, not just Nikola, has been the absolute lack of demand for electrification after the peak back in 2021.

All of the early adopters of electric vehicles are in, and then it’ll take a long time, if ever to see the average consumer buying an EV.

Basically every large-scale legacy manufacturer in the automotive space has delayed plans to focus on EVs. They can see that consumer sentiment is just not there yet for them to make the complete swap to electric models.

Even with the significant competition, prices are still too high with how resource intensive it is to produce electric batteries and hydrogen fuel cells.

So going over all of the issues here, Nikola operates with:

• A capex-intensive sector which requires significant investments and time requirements to produce new vehicles.

• An industry prone to operational challenges, which they did encounter.

• Total addressable market in the hundreds of billions, if not trillions as time goes on.

• Because of that TAM, they have a nearly endless level of competition from both new manufacturers focused on EVs only, and the legacy manufacturers who have a vast operational advantage with existing production facilities and resources.

• Hardly any differentiation between one auto manufacturer and the next, they are price takers.

None of this sounds great to me as an investor. The risk is simply not worth the potential reward. That you are unlikely to even receive. Most of these companies will go bankrupt, as Nikola has.

Instead, what we should be looking for in a industry or opportunity is:

• Ideally, low levels of competition.

• Capex-light expansion options, keeping costs relatively similar while still growing.

• The low levels of investment required often lead to a quicker path to first revenues, and ultimately profitability.

• Barriers to entry that lead a company to have a moat (patents, network effects, etc).

These are some of the factors that will dramatically increase our chances of success, especially if we’re buying unprofitable companies.

And these are some of the factors that I prioritize when researching new investments.

Most of the people holding the company received their initial shares as a dividend through Abaxx Technologies (ABXX) when they spun out the business.

At the time, the Russian invasion of Ukraine was just kicking off.

That event, and the subsequent economic turmoil, killed any momentum the carbon credit space had.

This was only exacerbated by The Guardian releasing a popular article arguing that over 90% of REDD+ credits registered with Verra were likely fraudulent. A critique that shattered trust in the voluntary carbon markets (VCMs).

Since then, we watched Base go from an unprofitable startup, to:

• Reaching profitability.

• Buying back shares through an NCIB.

• Owning several 10-year lifespan cash-flowing projects.

• Already receiving FULL PAYBACK on one of those projects.

• Partnering with STX Group to launch a fund (still in the works).

And that isn’t even an exhaustive list.

Most micro-caps never achieve anything to this extent, especially not in such a short time…

How has the market rewarded these accomplishments?

I am down 30% on the stock as I write this.

It has become clear to me that nothing this company does will matter if the sentiment in the broader VCMs remains this abysmal.

The only hope of seeing significant capital appreciation any time soon is a buyout from a corporate buyer who wants the carbon credit portfolio. Probably one of the airlines.

Any chance of this happening was likely delayed by CORSIA banning the methodology Base’s cookstove projects are currently using. To be eligible, those projects would need to upgrade to Verra’s new VM0050 methodology for cookstoves.

We don’t know if the project developers Base is working with want to transfer to that methodology yet.

The stock is in total limbo, and I see no reason for this to change.

Sentiment could not be worse with the election of Donald Trump.

Every climate-conscious head of any of the governmental agencies is getting shown the door. Not a surprise.

In the grand scheme, carbon credit demand has actually been stable or growing this whole time. Corporate involvement in these markets has not slowed down.

Supply has begun to constrict as buyers demand quality, verifiable credits— Verra has become an unprofitable organization because of the decline in credit issuances.

So, the supply and demand situation is arguably the best it has ever been…

But it doesn’t matter when institutional investors can’t establish a significant position in such an illiquid stock… if they can even buy on the OTC or CBOE CA at all. And retail (generally) has no interest in this industry.

Just like any traditional commodity, if the overall industry sentiment is terrible, even with improving fundamentals… no one cares.

Additionally, there isn’t much Base could do to generate some excitement, even if they wanted to.

There is an evident lack of quality projects to buy into, given they haven’t invested in a new project since August 2023.

Even if they did, they have been looking into methodologies like biochar, which is unlikely to have an investable project with significant carbon credit volumes.

So, I see no reason to continue holding the stock at this point. The position has been beaten down to represent less than 5% of my portfolio now.

The opportunity cost has been immense, and I don’t think I’ll be rewarded for continuing to wait.

I hope they prove me wrong— soon, and that this company succeeds. Its management team is fantastic. They’ve made all the right decisions in a market sector that has been an absolute disaster.

Even if we get a buyout here, depending on the time frame, it might still be better to own Abaxx, Aduro, or any of the other companies I’ve profiled instead.

Allegedly, “known” insiders or large investors like Robert Friedland, Abaxx, or the management team hold ~80% or more of the share count.

That dramatically reduces the float.

At some point, all of the sellers could be exhausted through the share buyback program, and the stock could actually begin to move higher if buyers came in.

But again, I see no reason why any significant buying would occur.

As things stand now, there is no telling when the VCMs might turn around. Or when a buyout might happen.

It could take another couple of years, or it could happen tomorrow…

Either way, the stock is becoming increasingly irrelevant as it gradually becomes a smaller and smaller part of my portfolio. So, I think I would rather reallocate the funds at this rate.

Lessons Learned

In theory, given the company’s success, this should’ve been my first publicly profiled stock to point to as a great investment. It deserves to be a 5-bagger, in my opinion— if not higher than that.

The fundamentals paint the real picture, but the stock price can take some time (if not many years) to catch up. I won’t hold my breath and wait any longer. There are hundreds of “cheap” stocks that never get recognized for a variety of reasons.

Ultimately, this has illustrated just how vital sentiment can be when looking into an investment opportunity.

Carbon credits are uniquely hated by basically everyone outside of a corporate setting. Probably even a lot of the people working in corporations.

There is no other way to offset emissions for a significant number of processes.

But the political left hates them because they don’t see credits as a “real” solution. The political right hates them for obvious reasons. Anything climate change-related is a scam.

Eventually, either carbon credits will start being used, or the climate change narrative will die. I would bet on carbon credits, but that doesn’t mean it will happen fast.

With my luck, they will announce a buyout tomorrow :)

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The owner of Green Investing is not a licensed investment professional. Nothing produced under the Green Investing brand should be construed as investment advice. My content is made for entertainment and educational purposes. Do your own research.

Transcript

In this video, we are going to be reviewing the stock Hempalta, ticker HEMP.V.

This is a company that sells a variety of substitute consumer products made with hemp. Including garden mulch, cat litter, biochar, concrete, and more.

That product lineup typically would not interest me, but what did was the fact that this company also owns the Hemp Carbon Standard (HCS). From what I’ve seen, this is the only publicly-traded carbon standard body.

They operate a carbon methodology used to create carbon credits from sequestering carbon through the production of hemp. We’ll talk more about the HCS later in the video.

Hempalta went public via an RTO with Trailing Blaze Ventures. At the time, sporting a nearly $18 million market cap. Now down to just $5 million.

So, lets go over the company’s fundamentals, and what issues they have run into so far.

Now, looking at the company’s original product lineup, a simple search of Amazon finds a variety of very similar products. So, by no means is this an uncontested market. And there’s not really a great way to differentiate these products either.

I like to look for stocks that are as close to monopolies as possible, because that’s how you sustain high margins for long periods of time. Low levels of competition. And there is clearly plenty of competition with these hemp goods.

Recently, the company put out an update that they were going to be suspending the production of these products. Instead, they would be pivoting to focus all of their efforts on scaling the Hemp Carbon Standard.

Hempalta would retain ownership of those brands, and offer them out to other firms as a licensing opportunity. I have no idea if they will actually be able to license out those rights or not, but that would be a less capital intensive path than manufacturing those products themselves. So, that did make Hempalta more interesting to me.

The main question now was if transitioning to a focus on the Hemp Carbon Standard would make me want to buy the stock

To understand that, we first need to know how the HCS even works.

Once they sign up a hemp grower under their regenerative agriculture methodology, they measure, report, and verify the carbon credits those farms will generate through the use of flux towers and Sentinel 2 satellite data.

It’s worth noting there are other methodologies beyond just hemp, including biochar, building materials, bio-oil, and more. But most of HCS’ activity is focused on the cultivation of hemp.

Hemp is seen as one of the best crops for carbon sequestration, in fact, it is proven to absorb more CO2 per hectare than any forest or commercial crop. In theory, that is ideal for sequestering carbon out of the atmosphere. Where one carbon credit is equal to one ton of CO2, which companies can use to offset their carbon footprint.

Once that carbon sequestration has been validated, HCS will sell the carbon credits through Patch, Cloverly, or other services. HCS receives a revenue share of the profits with the farmer.

I haven’t seen it explicitly mentioned anywhere what the profit sharing percentages are between the farms and HCS, but we can back into a likely estimate.

Hemapalta says that they generated $42,000 USD in sales from carbon credits as of December 31st, 2024. Nearly all of those were sold before the end of September, which was when Hempalta’s last financial documents are from.

Here we have Hempalta’s previous sales with the hemp product lines that they aren’t producing any more. The “Others” category is a grouping of HCS and other assets.

Assuming all that nearly $12,000 in revenue came from the HCS, we convert that to USD since this is in Canadian dollars, and we get $8,400 USD. That is around 20% of the sales figure in the company’s slide deck.

So, we can assume the revenue split is that 80% goes to the farmers, and 20% goes to Hempalta for owning the HCS. Something like that.

HCS is partnered with the Trusted Carbon registry, which is used to track the carbon credits generated from these projects.

To ensure those carbon credits are trustworthy, the methodology is verified by a third-party verification and validation body (VVB) called Control Union.

They have been accredited with Gold Standard, which is the second largest carbon registry in the voluntary carbon markets. And they’re also pending approval to act as a VVB with Verra. The largest carbon registry.

That does bring some credibility, but I do think HCS is missing some crucial pieces to being a mainstream carbon standard.

Now, it’s important to note that demand in the voluntary carbon markets is shifting. Specifically, toward markers of credibility, since these markets have a history of fraudulent or exaggerated projects.

The main thing credit buyers are starting to look for is approval from the Integrity Council for Voluntary Carbon Markets (ICVCM). They have a process called the Core Carbon Principles, that projects must follow to be seen as credible.

As of the making of this video, the Hemp Carbon Standard has not even tried to apply for approval under this program. So, I find it hard to believe that they are going to find a significant amount of buyers for these credits. Especially when they are priced at around $30 or more.

And you can see the lack of demand in their results so far. The HCS generated 15,325 carbon credits in 2023, and as of December 2024, only 976 of those credits have been sold.

The standard was on track to generate 52,540 carbon credits from an increased number of sites and acres covered under the carbon methodology. But, again, it doesn’t really change much if most of the credits will go unsold. Without that validation from the ICVCM, and preferably even more organizations… demand will likely remain low.

Related to that credibility problem, Hempalta isn’t the only organization that could potentially offer a carbon methodology for generating carbon credits from cultivating hemp.

Verra has a methodology that is under development for doing just that, but it was put on hold back in December 2023 for fears of permanence risk. Meaning, Verra is worried that the carbon credits could end up worthless since the hemp products might not last as long as people hope.

The argument that growing hemp and sequestering carbon from it is a long-lasting solution since hemp insulation or hemp concrete would be durable products. Well, Verra is questioning that. But they are set to re-evaluate the opportunity this quarter. Q1 2025.

So, we have the monopoly in the space, Verra, which issues 60% of all of the carbon credits in these markets, saying that they aren’t sure this is a scientifically sound methodology. And worse than that, we have the monopoly in this market investigating if they should enter competition with HCS to offer a hemp methodology of their own.

I don’t see how the HCS could reach significant scale if Verra does start to offer its own methodology for hemp. I assume that Verra would eat Hempalta’s lunch in that scenario.

While I think it’s an interesting opportunity, I would not say that I’m a believer right now.

Unless adoption of the HCS methodology, and demand for the credits changed dramatically, it looks like Hempalta is going to be struggling for cash. The stock is going to be diluted heavily as the market cap continues to drop here.

Hempalta has already doubled its share count in a year, especially when needing to pony up more shares to acquire the HCS in the first place.

And now they are doing another raise as part of this shift to focusing on the HCS instead of the hemp product line.

An additional 30 million shares at 5 cents, and half warrants for gross proceeds of $1.5 million.

I also question how capital-light this business is to begin with. In theory, it could be because it doesn’t take much to create carbon credits, and everything can be tracked remotely with that satellite and flux tower data. The farmers are putting in all the labor.

But at the same time, we can see what Verra’s expenses and profits look like. Their expenses have been rising rapidly over the last few years. Even to the point of bringing the organization to a significant net loss over 2023.

So, if Hempalta has to make similar investments over time, it’s hard to truly know if the business is going to stay capital-light. Verra certainly hasn’t.

I will just have to pass on this one given the uncertainties and risks.

Instead, most news coverage will remain free, but it won’t be in a daily series like Green Markets was.

I intend to narrow the scope of the news updates to primarily focus on events that can directly affect stocks. Not general business news in these sectors.

I will provide news updates through Substack’s chat feature. Make sure to download the Substack app to ensure you don’t miss them.

Additionally, I will just make individual posts when there is a trend/news that I think deserves a longer post.

The breakdown of what subscribers will receive is shown below:

Free subscribers will receive:

• Coverage of news events in green sectors.

• YouTube transcripts, videos about microcap stocks.

• Educational posts on investment process or market overviews.

• Updates on my first three, free stock write-ups: Abaxx Technologies, Aduro Clean Technologies, and Base Carbon.

• Access to the free subscriber chats. I will post a variety of updates here.

Paid subscribers will receive:

• Investment write-ups on microcap stocks and any subsequent updates.

• Access to my stock portfolio and watch list of potential investments.

• Over 10+ stock lists of potential investment opportunities in green industries.

• Notifications about new listings (IPO/RTO/SPAC) in a variety of green sectors.

• Access to the paid subscriber chats. Updates about the stock lists, watch list, or other commentary will be provided there.

I will be focusing more of my time on researching investment ideas.

I’ve set a quota to release 5-10 paid stock reports per year. This could be new investments I’ve made or a company I’ve added to my watch list.

Again, thank you for your support over the last year.

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My goal for this newsletter was to make content that no one else was— coverage of nearly every industry related to the energy transition, from an investor’s lens.

All the stocks I invest in are operating in these markets. I already needed to take note of many of the things I discuss in my content now… it was a no-brainer.

At the time, I figured I needed to cover everything, even if I didn’t have any interest in the industry.

This led to a significant amount of my time being spent on following news, making daily posts, and talking about medium/large-cap stocks I would never buy (YouTube).

The extra work has taken away from me focusing on what people are actually paying me to do… research new investment ideas. Particularly micro-caps.

And that can’t be made any more apparent than what we see in my Substack data:

Since September, my number of free subscribers has doubled, which is certainly a good sign.

Meanwhile, my paid subscriber growth has essentially flatlined.

I suspect the reasoning behind this is simple… I’m not posting enough investment ideas.

Obviously, this is an unsustainable trend if I ever want to earn a living wage from my work here on Substack.

So, I have two options:

1. Make Green Markets and other news content paid (in a second, lower tier for $10/month)

2. Stop covering most news and use that time to research stocks

There are several changes I can make to ensure I’m researching more stocks, which I will implement regardless. For example, only making videos about micro-caps instead of researching medium/large-caps. But I need clarity on whether the Green Markets series and broader news coverage are still worth making.

If there isn’t significant interest in paying for those, I will have to stop doing it and tighten my focus to only covering news events that directly affect the stocks I discuss here. Most of that would be paid content. News that affects Abaxx Technologies, Aduro Clean Technologies, or Base Carbon would remain free.

The new tiers would look like this:

• Free subs receive: Occasional free posts, video transcripts, updates on Abaxx, Aduro, and Base

• $10/month - Lower paid tier receives: Green Markets series, broader news content, stock lists

• $20/month - Highest paid tier receives: Everything from the lower tier plus investment write-ups, watch list, portfolio access, company updates

If you’re not interested in paying for the highest tier, let me know if you would pay for the news content.

I apologize for having to make this change, but I won’t be able to continue making content on here otherwise.

I appreciate your support.

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