I enjoyed reading “New Constructs: Disrupting Fundamental Analysis with Robo -
Analytics.” This type of technology can have positive and negative responses to business.
There are many new technologies that businesses have that are beneficial for companies.
My dental clinic has a kiosk that helps check people in within seconds. I personally love
using the kiosk but I have noticed the older generation are not too fond of this new
technology.
I believe that CVS would be impacted in a positive way with this trend. Being that CVS is
a big company Robo - Analytics would give CVS an opportunity to work without bias and
can gather information in a timely and effective manner with minimal human error. This
trend would also be beneficial due to the number of customers and how complicated the
balance sheet and income statement can be.
Robo - Analytics would also give CVS an opportunity to provide data-driven personalized
customer experience and CVS announced that Microsoft will be partnering up with them to
do just that. This partnership would provide a digital health platform for its customers which
will create a personalized experience and help with customer loyalty.
New Constructs reviews every detail of a company's annual 10K and 10Q reports to "to
deliver quality fundamental analysis at scale" (Wang & Thomas, 2021). I believe that
eventually Microsoft would be willing to use New Constructs to measure economic earnings
and profitability to compare to those that are their competition like Apple and Google.
Finding data points from the footnotes and the MD&A of Microsoft's financial annual
reports would help analysts and the Microsoft accounting team make the appropriate balance
sheet and income statement adjustments. The adjustments that are extracted and compiled
from New Constructs can be over-ridden, if necessary, with the idea and hopes that
companies are able to make better informed business decisions. I think that it is inevitable
that most companies would use this new technology in the future, because human analysts
can only sift through so much data at any given moment or day. A computer program
designed for sifting through mountains of data and picking only the relevant quantitative
points could be a great solution to employees wasting time on analysing mountains of data.
I believe that this trend will have a positive impact on Amazon.com because they will be able
to efficiently facilitate apples-to-apples comparisons across firms (Wang & Thomas, 2021). In
addition, because Amazon.com specializes in online retail shopping, I believe this type of
technology will help the company develop new features to improve both the shopping and
selling experiences. With continued technological advancement, robo-analysts could perform
much better and faster with fewer errors, which can be difficult with human analysts at times,
while remaining cost effective.
“For a human analyst to make the appropriate balance sheet or income statement adjustments
to facilitate apples-to-apples comparisons across firms, [he/she] had to attentively read
hundreds of pages of filings for multiple firms and multiple years and accurately collect all
the data” (Wang, C., & Thomas, K., 2021, June 25). But with Robo-Analysts it can be
computed automatically. What would essentially take hours, days, or weeks can be
completed within minutes. With Amazon already being as automated as possible, this may
be the next step. Amazon already deals in e-commerce only (no cash or cash registers) and
automated shelving/restocking. Why wouldn’t an automated accountant be the next step?
With every advancement of technology, an impact will hit all industries and businesses,
especially technology such as Robo-Analysts. Every industry uses accounting in one form
or another, but taking out human error, time constraints, and fatigue could possibly save
millions. A company like Amazon will save millions in wages and operating expenses. With
how Amazon handles its competition and acquisitions, Robo-Analysts will be to show
Amazon the best next acquisition.
Conversely, “[there are] notable misses in New Constructs’ stock recommendations.
Amazon, for example, never received a New Constructs’ rating above “Neutral” although
the company’s stock price grew over 7,000% since 2003” (Wang, C., & Thomas, K., 2021,
June 25). This alone may not be the reason Amazon invests in this product.
I feel that Disney will and likely already is being impacted by robotic analysis, and it is even
more likely that they are benefiting from it as well. Robotic analysis alongside human
analysts could greatly benefit the Walt Disney Company due to the large conglomerate that
it is and all the different avenues of revenue they receive. "Robo-analyst technology can
identify many critical data points overlooked by most research analysts today" (Trainer,
2017). After working on the ongoing class project, I discovered that Disney reports their
financials under different segments that consolidate into one financial package. Different
areas are reported on within those segments as well. Robotic analysis would allow for a
more accurate and thorough analysis of each segment if the Walt Disney Company such as
motion pictures, television series, streaming platforms, theme parks, and merchandise.
Being able to compare all these different segments provides the opportunity to allocate
resources more effectively and therefore increase future revenues.
Why Robo-Analysts, Not Robo-Advisors, Will Transform Investing (forbes.com)
Wang, C., & Thomas, K. (2021, June 25). New Constructs: Disrupting Fundamental
Analysis with Robo-Analysts (No. 9–118–068). Harvard Business
School. https://services.hbsp.harvard.edu/lti/links/content-launch
Wang, C., & Thomas, K. (2021, June). New Constructs: Disrupting Fundamental Analysis with
Robo-Analysts (No. 9–118–068). Harvard Business School.
https://services.hbsp.harvard.edu/lti/links/content-launch
Wang, C., & Thomas, K. (2021, June). New Constructs: Disrupting Fundamental Analysis
with Robo-Analysts (No. 9–118–068). Harvard Business
School. https://learn.snhu.edu/d2l/le/content/1114809/viewContent/18955851/View
https://hitinfrastructure.com/news/cvs-and-microsoft-announce-digital-health-partnership-
ai-cloud
