Investment IdeasMy Portfolio

Zipline

Autonomous delivery drones

PRE-IPOmedium risk

Share price in 2018-2020

Company income
$8.5
$16.4
$33
Current price
$40.80
Min Amount
$10
Earliest start
Any time
Fee
Enter 3.50%Leave 0.50%Success 20%

Invest in Zipline

Investment Idea Details
About the company

Zipline designs, manufactures, and operates drones to deliver vital medical products to everyone, no matter where they live. It has developed the first autonomous delivery system delivering vital medical supplies and operating at a national scale with revenue. Zipline was founded in 2014 in Silicon Valley, US.

Zipline drones have flown more than 8 million autonomous miles, delivered more than 1.5 million vaccine doses, units of blood, and other critical medications and made drops at more than 2,500 facilities serving 25 million people.

Zipline created Zip, a small autonomous airplane designed for a high level of safety, using many of the same approaches as commercial airliners. It can carry vaccines, medicine, or blood. Health workers at remote clinics and hospitals text an order with Zipline for the medical products they need, on-demand. The box is attached to a small parachute that the drone then gently drops at the hospital or clinic. Zipline safely stores medical products at its Distribution Center, enabling immediate access to even the most sensitive or scarce items.

Zipline’s goal, says co-founder and CEO Keller Rinaudo, is to put every person on Earth within a 15- to 30-minute delivery radius of any essential medical product they need, no matter where they live. Zipline currently operates in Rwanda and Ghana. Since its founding in 2014, Zipline has gone from one base serving half of Rwanda to two bases serving the whole country. It also has launched four new bases in Ghana. The six facilities combined will deliver to hospitals serving over 20 million people.

Market Opportunities

ARK Invest, a management firm that invests in breakthrough technologies, believes that in the not-too-distant future drones will deliver packages, food, and even people quicker and more conveniently than ever before. Drones are likely to transform shopping behavior, reduce travel time, and save lives. Drones should reduce the cost to transport goods and people dramatically. While not yet commercialized, ARK Invest estimates that drone delivery platforms will generate nearly $50 billion in revenues, $14 billion in hardware sales, and $3 billion in mapping revenues by 2025. The cost of a 10-mile drone delivery with a piloted drone would cost about $8 but with a fully autonomous drone, this could be as low as 25 cents per delivery.

Zipline’s customers are governments, pharmaceutical companies and large logistics networks. In May the company partnered with Novant Health in North Carolina to start long-distance deliveries of critical medical supplies to frontline medical workers. The company’s goal in the U.S. is to ramp up emergency efforts that would focus on delivering new treatments and an eventual vaccine to the places that need them most.

According to information on Glassdoor, Zipline’s product is seeing surges in demand, new sales, and steps toward profit. The transition to remote work has felt natural and productive. The company is growing very rapidly, so there is a ton of opportunity for impact and autonomy. Zipline is currently going through the phase of scaling.

In March 2021, Zipline announced a partnership with Toyota Tsusho Corporation, a member of the Toyota Group. The partnership with Toyota Tsusho will enable delivery options of pharmaceutical supplies and other critical medical supplies to remote areas, including islands, eventually expanding to other use-case scenarios. Someday, suggests the release, Zipline drones could be making deliveries throughout Japan.

In September 2020, Walmart and Zipline signed a partnership to bring first of its kind drone delivery service to the United States. The drone operation with Walmart will deliver health and wellness products initially, with the potential to expand to general merchandise. Trial deliveries for the new service will begin in Northwest Arkansas and cover a 50-mile radius, according to a statement from Walmart.

Earlier in 2020, Zipline started a pilot delivery program with Novant Health. Zipline has been delivering medical equipment and personal protective gear via drone to regions of North Carolina since May 2020.

Risks

The drone industry has grown so rapidly that regulators are unable to provide strong oversight. Tracking/monitoring technology could also help operators avoid breaking laws in the first place to ensure drones do not stray into controlled airspace. Regulation is developing, but is inconsistent between international jurisdictions, making the entire process complex and protracted.

A regulatory system that relied heavily on responsible behavior and/or the threat of sanctions could generate significant uncertainty for insurers. Effective collaboration and a consistent multinational approach will help enable the development of standard insurance wordings and cover for drone operations.

In addition to regulatory and legislative oversight, the aircraft drone delivery industry requires significant certainty for insurers. Insurance companies may become the main driving force behind the development of unmanned technologies.

Drones are vulnerable to a range of cyberattacks. Drones for non-military use rely on unencrypted data links for command, control, and navigation. Realizing this, hackers have jammed, intercepted, and manipulated the drones’ controls.

Players in the drone delivery market are experiencing intense competition because of the growing demand for faster and safer transportation services. The prominent players include DHL, FedEx, Embention, and startups Skydio, Matternet, Vayu, Flirtey, and Swoop Aero. The increasing demand is anticipated to drive the emergence of new players.

Financials and Valuation

Zipline has raised a total of $533 million in funding over 7 rounds from 32 investors including Techstars (invested in Twilio, DigitalOcean, Uber), Sequoia Capital (invested in NVIDIA, UiPath, Zoom, Apple), Andreessen Horowitz (invested in Affirm, Coinbase, Pinterest), Google Ventures (invested in Uber, DocuSign, HubSpot), Goldman Sachs (invested in Spotify, Tesla, Square). Their last Series E funding was raised in December 2020 at a valuation of $2.81 billion, $32.63 per share.

By 2025, the revenue from the drone market is estimated to rise to $50 billion, with the usage of drones in the health sector will grow at the fastest rate, at about 25% per year. Zipline is a key player in the drone market for medical supplies, dominating Africa. The Middle East and Africa region account for about 30% of this market.

Over the past two years, Zipline's share price has been trending upward at a steady pace, seeing intense investor interest in the industry. In 2018, the share price at the investment round was $8.5, in 2019 — $16.4, and in 2020 — $33. We expect that the company’s entry into new markets this year (the U.S. and Southeast Asia) will keep the demand for Zipline’s services growing at a brisk pace over the coming few years. The next funding round expected in 2022 may value the company at $6 to $8 billion. Estimated return on investment — over 150%.

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