This is the attention-getting lead-in from a recent ad for Adam O’Dell’s Green Zone Fortunes ($99 first year, $199 renewal, 30-day refund period):

“RIP: Apple iPhone 2007—2024?

“Why Apple (The World’s Most Innovative Tech Company) Has The Guts to Kill Its iPhone Starting September 10… And Launch The Next Big Thing In Its Place”

We’ve seen somewhat similar pitches before, about how Apple is going to cannibalize its own iPhone business with something better — either in virtual/augmented reality, like the Apple Vision Pro, or just in the form of an AI-powered iPhone of some sort.

So with the caveat that Apple almost always moves more slowly than anyone expects, and rarely brings on a small company to be a big new supplier, let’s dig through and see what exactly O’Dell is hinting at… and what he thinks we should buy.

Here’s some of the big picture “creative destruction” pitch about killing the golden goose… he gives a bunch of examples like Sears losing out to Amazon, Dell missing the “cloud” train, and Blockbuster failing to buy Netflix…

“Few companies have the guts to kill an iconic… admired… refined… brilliantly conceived… historically significant… multibillion-dollar business… ON PURPOSE….

“Sears, Dell, and Blockbuster aren’t individually unique cases.

“If America Online was granted a redo…

“It could’ve killed its dial-up business and become an early-mover in broadband.

“If Kodak was granted a redo…

“It could’ve killed its film business the moment it invented (and patented) digital technology.

“If Myspace was granted a redo…

“It could’ve killed its social platform in favor of Facebook’s (Mark Zuckerberg offered to sell Facebook to Myspace for $75 million).

“If Yahoo was granted a redo…

“It could’ve killed its own search engine in favor of Google’s (Sergey Brin offered to sell Google to Yahoo for a million bucks).

“See, by strategically killing, say… an aging business model… a declining product… an outdated design… a tired brand… a fading trend… Sears, Dell, Blockbuster, America Online, Kodak, Myspace, and Yahoo could’ve stayed perched atop their kingdoms.”

So that’s the general theory here, that Apple is going to “kill” the iPhone, because they know there will be something new to take its place and they want to provide that new something.

And the tease begins…

“In a moment, I’ll reveal the best stock to own as Apple prepares to kill its iPhone. I expect a single share to go a long… long… long way… because it accomplishes something truly powerful…

“It grants you ownership in a company, but not just any company…

“I’m talking about ownership in a thriving company… a company radically expanding its customer base … a company hiring the best talent … a company on the leading edge of a revolution … a company with 10-bagger potential… like I just said, a company exactly like Apple in 1980!”

And more hinting…

“It’s a tiny company making what I believe is an indispensable part for the iPhone Killer.

“On the low side, I believe this company could double in price…

“On the high side — i.e. if shares follow the same trajectory as Apple — you could pocket up to 20x your investment over the next several years.”

And as you might guess, it’s all about artificial intelligence (A.I.)…

“Apple has been going full-speed ahead to roll out its ambitious AI product.

“Code-named ‘MM1,’ credible sources believe the technology’s highest purpose is…

“To kill the iPhone….

“I have every reason to believe (and boldly predict) that…

“Apple will reveal its plan

“…to launch the iPhone Killer… during its fall event on (or around) September 10.”

He gives a bunch of examples of “creative destruction” that happened to be tied to big investment gains… including this one:

“iPhone Killer: A Market Worth 14X the Entire Robotics Industry…

“The idea of surgical robots was nothing but science fiction in the mid-1990s… something you’d only see in a Star Trek or Star Wars movie, like when Luke Skywalker’s hand gets surgically replaced by a robot in The Empire Strikes Back.

“But fiction became reality in 1995. Instead of using their own arms and hands to perform surgeries, a group of doctors came up with an idea to use a robotic arm.

“By 1996, the newly formed company, Intuitive Surgical, had its first prototype.

“In one of the greatest destructive acts in medical history, the robotic system — named “Da Vinci” — has now performed over 5,000 surgeries.”

I don’t know where O’Dell gets his facts, but that’s WAY off… Intuitive Surgical’s (ISRG) Da Vinci has now been used to perform more like 14 million surgeries. Awfully richly valued now, but an amazing company that has certainly had phenomenal stock market performance. And it was a VERY slow rollout that did not seem at all inevitable at the time, so we should remember, of course, that when we look back we tend to only focus on the disruptive technologies that worked — a lot more of them never got off the ground, and never became commercially viable at all.

And we have the FOMO bit, the “you gotta buy now!” part of the spiel…

“From my experience, the 80/20 rule easily applies here.

“A stock’s first leg higher — which occurs before any news hits — is typically the most aggressive, constituting 80% of the overall gains. By that point, the remaining 20% (the leftovers) are split among ‘wait and see’ investors.

“For proof, look no further than shares of II-VI Inc. in 2021.

“That’s when they received a $410 million contract from Apple to put their VR technology in their headsets.

“Did the stock wait till this year when Apple officially released its Vision Pro headset?

“The chart says no.

“With that in mind, I recommend taking action BEFORE September 10.”

Funny, I wrote about that company recently — the Motley Fool has been teasing Apple’s investment in II-VI (now renamed Coherent (COHR)) as if it were a recent decision… it was actually part of their strategic supplier investment program, to seed investment for more VCSEL production (for Apple’s FaceID scanners at the time, not for any Apple headsets). And I don’t know what the hell O’Dell is talking about with this “the chart says no” bit, here’s the chart for IIV/COHR going back to the announcement of that $410 million Apple investment in this supplier 3+ years ago…

Does the fact that O’Dell gets some facts wrong along the way mean his “secret” stock is worthless this time? Not necessarily, it’s just a reminder that this is a teaser ad, it’s all about narrative and getting you to feel panicked about missing out on his hot idea… it’s not about calm and rational analysis.

Of course, he wants you to think that he has it all on the line, and can’t afford to be wrong, so you should trust his prescience…

“As a renowned analyst whose insights are relied upon by top investment pros from U.S. Bank to Morgan Stanley to Merrill Lynch — I can’t risk being wrong.

“See, I’ve suspected that Apple’s had the iPhone Killer in development for the better part of the last two years. Yet, I also have strict criteria when it comes to releasing my research to the public.

“For the iPhone Killer, I knew certain breakthroughs had to occur before I’d even consider sharing my findings with the world.”

From the evidence of our tracking spreadsheets, which note whenever we cover a teaser ad and how the performance of the stock has been since then, we can say that he’s been “wrong” about half the time in recent years (both his first Imperium pitch and his updated one touted stock picks that performed very poorly, and more recently his recommendations of Palantir and Synopsys have done pretty well this year). That’s not necessarily much different than other over-promising pundits, more than half of teased stocks fail to keep up with the S&P 500, but it’s a reminder that as investors we have to make our own judgement calls — you might love or loathe this stock (we’ll get to it in a minute, I promise), but don’t put too much weight on the source of the idea, or on his claim that he “can’t afford to be wrong.”

So what is it that this next iPhone will need to put “the power and promise of Chat GPT’s creation in the palm of your hands?” More from the ad:

“Since the iPhone Killer aims to provide users with a seamless AI experience, the MM1 model must be able to process complex queries about images and text in a small device… and MM1’s two new approaches effectively double the memory capacity without increasing the size….

“Apple’s AI team — grown partly by 32 startup acquisitions this last year — has reportedly had a resounding breakthrough in AI language models, which have the potential to power the iPhone Killer….

“AI uses an incredible amount of energy.

“Which is why any device using Apple’s MM1 technology will need more power… which means upgraded parts… and thereby making the battery arguably the iPhone Killer’s most important part.

“This company (which I recommend you buy right away) has developed what I call “3D Power” technology… because a) it’s the first 3D battery of its kind, and b) it’s designed to deliver at least TWICE the power of a normal battery.

“In fact, I’d say that without 3D Power’s advanced engineering, innovative science, and sheer power… the enormous power and promise of AI baked into the iPhone Killer wouldn’t be possible.”

OK, so the pitch is that Apple will need a much more powerful battery for the iPhone in order to more fully push AI computing to these devices… and that therefore Apple will need to contract with (or maybe even buy) O’Dell’s favorite “3D Power” battery company…

More clues…

“… while no official relationship with Apple has been made public so far…

“I can 100% confirm their “3D Power” technology is already in the hands of 6 of the 8 largest smartphone makers as we speak.

“And based on all my research, I’m fully convinced that Apple is one of them….

“… the global leader in “3D Power” technology — an absolutely essential component to every iPhone Killer — is a small company based in Fremont, California.

“How small? ….

“The global leader of 3D Power technology is a tiny firm 0.10% the size of Apple! The company’s powerful tandem of mind-blowing innovation and patents reminds me of Apple in 1980. No wonder it sits atop Big Tech’s “wish list” of strategic acquisitions.

“I believe Apple will formally announce its iPhone Killer plans. If I’m correct, shares of the tiny company atop Apple’s ‘wish list’ — the innovator of 3D Power technology — could double in price overnight….

“I believe Apple is prepared to make an offer to buy this little company, thus eliminating it as a potential competitor… and gaining all of its ‘3D Power’ intellectual property in the process. In my buyout scenario, Apple could offer over $50 per share.”

So what’s O’Dell talking about?

Well, the Thinkolator tells us that the stock he’s pitching is Enovix (ENVX), which is an early stage battery developer that has had a wildly volatile ride over the past few years — not unlike a bunch of other “next gen battery” companies that came public through SPAC mergers in 2020 and 2021 — as people got overly excited about the potential for the next great electric car battery, and then discouraged by the slow pace as new battery designs move from the planning stage to prototypes and, potentially, mass production.

What differentiates Enovix batteries is the use of silicon anodes, instead of conventional graphite anodes. The combination of materials and their layered design apparently leads to a much safer battery, and they say their BrakeFlow design helps the batteries resist heat and punctures without catching on fire.

Their current design is the EX-1M battery, which is supposed to be in production now, at least in a small way, for internet of things devices… and could be in smartphones by next year, they say, with a goal to “launch in multiple smartphone models.” Late this year they’ll start sampling their next version, EX-2M, to support possible 2026 products and begin to really scale up production.

And yes, in their investor presentations they do mention that six of the top eight smart phone makers will receive or have received samples of the Enovix EX-1M battery to test.

It’s been a wild story — Enovix was a sexy idea from 2020 to 2022, when they went public through a SPAC merger and began to look like they might quickly have their first production line up and running and selling batteries. Then it started to look like things were moving slow, and they were having trouble getting to the promised level of battery cell production, and major shareholder T.J. Rodgers came back as Executive Chairman to try to fix the operations. He made a pretty compelling presentation at the time, in January of 2023, giving a brief history of the company, their challenges in meeting investor expectations over the first couple years, and his plan to get “silicon guys” in and change the culture to scale up more aggressively, in January of 2023. (Rodgers, if the name isn’t familiar, is a semiconductor industry pioneer, he built Cypress Semiconductor into a giant starting in the early 1980s).

The problem, apparently, was not just that they had overpromised to investors, but also that the technical challenges of scaling production were meaningful — their machines weren’t really working as expected, and they were cadging things together with a much more manual production line to try to make any progress at all… so everything got significantly delayed from the initial plan (which was hyper-optimistic, as with most SPACs, they aimed to be at full production with the first fab in 2023, and reach $400 million in revenue by 2024 — the current analyst estimates are essentially a ~3-4 year delay from the initial SPAC promises). And while that presentation by TJ Rodgers, in January of 2023, was inspirational for a little while, investors have spent the last 18 months going through yet more ups and downs… so the stock has seen both $20 and $5 over the past year or so, and today it’s sitting right around the SPAC price, at just under $10.

They also raised some more money last quarter, “lengthening the runway” and helping to fund what they hope will be their commercial ramp-up in Malaysia, where they’re working on Fab2 and are installing equipment for their Gen2 Autoline, which is what they hope can provide a fully automated assembly process for larger next-gen batteries.

The latest news, as conveyed in their quarterly letter to shareholders, is that there are are a handful of agreements with potential partners and customers, and that does include an announced “agreement with a leading California-based technology company to provide silicon batteries and packs for a mixed reality headset” back in June, so perhaps that’s what got Adam O’Dell excited. Or maybe it was the earlier announcement that they have a development agreement with a “top five OEM” smartphone company.

Enovix CEO Raj Talluri also mentioned the Apple Vision Pro in some of his Medium articles this summer, but, of course, the mentions were in the context of “wouldn’t it be awesome if the Vision Pro had multi-day battery life” — not to announce that they were working with Apple. (Not that working on the Vision Pro would be a big deal in itself just yet, since the volume is so low for that product… but it would bring some hope for future adoption).

But really, it’s all about whether they can build these automated assembly lines for their silicon anode batteries, and get the yield up high enough to make those lines profitable, and it could all theoretically scale into something very large if that works… but it’s been a tough business getting the lines to work at anything near their planned capacity, and I certainly don’t know if or when it will be successful. My impression is that they’re moving in the right direction, but I’m certainly not an expert, and I don’t know how long it will take to get to commercially viable production… or if the batteries being sampled by customers will be acceptable for their needs. It certainly won’t happen with the next iPhone to be released in September, though, even if all the testing and customer acceptance steps were complete (they aren’t), Enovix is nowhere near ready to supply that kind of volume.

Here’s how Enovix sums up their recent shareholder communications:

“We are focused on categories where delivering an improved battery drives a high value to the product, resulting in premium pricing for our solution and supportive of strong long-term margins. We are pleased to see validation of our thesis playing out in our customer engagements.

“Our task now is to execute and prove our ability to scale manufacturing of leading batteries that usher in the next era of products for our customers.”

That’s a pretty good summary. Investors have been relatively patient, given the many challenges along the way, but eventually they have to execute and scale.

Analysts currently expect Enovix to burn through their remaining cash through 2024 and 2025, and to begin to be close to break-even in 2026, at which point they expect about $250 million in revenue. The wholesale cost of a battery for an iPhone is likely something in the range of $10-20, so if Enovix were to be supplying batteries for Apple AI phones by 2026 (again, super unlikely for a product that isn’t commercially viable yet), that would mean selling at most 25 million battery cells for smartphones in 2026. Apple sold 230 million iPhones last year, so we’re nowhere near talking about that kind of scale in the next few years — and that’s from analysts who are predisposed to be somewhat optimistic, since Enovix has recently been raising money by selling stock.

It might work out for Enovix, there’s a lot riding on their Malaysia facility being up and running and producing battery packs at commercial scale over the next year or two (or three)… and it’s even possible that one of their partners, even perhaps Apple, could invest in Enovix to help them expand their capacity, once it’s a bit more proven… but it’s very speculative to be expecting that or betting on it. And my take is that Enovix will not be announced as a major Apple supplier next month, not least because they’re not really ready to be supplying anyone at scale. It’s hard to see how they could be ready for that even a year from now, let alone next month.

Still, the move to Malaysia and the grand opening of that Fab has some promise, as they try to establish high-volume production, and Enovix looks a little closer to becoming “real” now than it did when I first looked at the stock back in 2021… so there’s probably at least a chance that this silicone anode battery could become a leading industry standard product in the years to come. I can’t tell you whether it’s a 5% chance or a 50% chance at this point, but it looks to me like ENVX is at least a little closer to becoming a real company than it was, maybe finally moving past the R&D stage, even though for investors who’ve been watching for a while it also probably feels like the company is performing terribly because they over-promised and under-delivered for so long.

That’s just what I think, though… a little more promising than it was in 2021, when the SPAC mania was out of control, and some progress made since that early 2023 reset, but lots still to prove. ENVX was a hot stock idea a few years ago, with a huge following on Twitter (and lots of promotion by Marc Cohodes, among others, along with some active short sellers on the other side), so I imagine a few of our Gumshoe readers own the stock or have some experience with this one… and, as always, I hope you’ll feel free to chime in. Think they’ll make it and become the key supplier of batteries for high end devices in a few years? Or maybe that the execution challenges will continue to be too much to overcome, and these battery lines will never be commercially important? Somewhere in between? Let us know with a comment below.

Disclosure: Of the companies mentioned above, I own shares of Google parent Alphabet and Intuitive Surgical. I will not trade in any covered stock for at least three days after publication, per Stock Gumshoe’s trading rules.