Calico

Calico (an acronym for California Life Company) is a pioneering R&D (Research and Development) company established in 2013 by Google and now operating under its parent company, Alphabet Inc.. Its profoundly ambitious mission is to understand the biology that controls lifespan and to develop interventions that enable people to live longer, healthier lives. Think of it as Alphabet’s quest to “solve death.” Calico is not a typical company focused on quarterly earnings; it's a long-term scientific endeavor. It operates as one of Alphabet's famous Other Bets, a collection of high-risk, high-reward ventures separate from the core internet businesses. By bringing together top scientists and providing them with immense resources and a long time horizon, Calico aims to make groundbreaking discoveries in the fields of aging and age-related diseases like cancer and neurodegeneration. For investors, it represents a bet on a future where science could dramatically extend human healthspan.

Trying to value Calico using traditional methods is like trying to measure the sky with a ruler—it simply doesn't work. Instead, investors should view it through a different lens.

Calico is the definition of a moonshot project—an audacious, exploratory venture that aims for a giant leap forward in technology or science, rather than small, incremental improvements. The name comes from the Apollo 11 moon landing, another seemingly impossible goal. For an investor, moonshots are the ultimate high-risk, high-reward plays.

• High Risk: The vast majority of these projects will fail to produce a commercial product or generate any revenue, consuming billions in capital along the way.
• High Reward: A single success could create an entirely new industry, generate astronomical returns, and fundamentally change the world.

Calico’s goal of extending human life is perhaps the biggest moonshot of all. Its success is far from guaranteed, but if it makes even modest progress, the societal and financial implications would be enormous.

Here's the catch: you can't. At least, not directly. Calico is a wholly-owned subsidiary of Alphabet and is not publicly traded. There is no “CALI” stock ticker to buy. The only way for an ordinary investor to gain exposure to Calico's potential is by purchasing shares of its parent company, Alphabet (GOOGL or GOOG). When you invest in Alphabet, you are primarily buying into its hugely profitable core businesses—Google Search, YouTube, and Google Cloud. Calico, along with other moonshots like the drone delivery service Wing and self-driving car company Waymo, represents a small, speculative slice of the overall company.

So, how should a prudent value investor think about a cash-burning, futuristic project like Calico? There are two main approaches:

1. The Deep Value Approach: A conservative investor might use a sum-of-the-parts analysis and value all of Alphabet's “Other Bets,” including Calico, at zero. Or even as a negative, since they currently lose money. This investor focuses solely on the cash-generating power of the core businesses and asks if the current stock price is justified by those profits alone. In this view, any future success from Calico is an unexpected, free bonus.
2. The “Free Call Option” Approach: A slightly more optimistic view is to see Calico as a free call option on the future of healthcare. If you believe Alphabet's core business is fairly valued, you are essentially getting a stake in these high-potential ventures for free. You aren't paying extra for the “what if.” If Calico fails, you haven't lost anything beyond what the core business was worth. If it succeeds, the upside could be immense. This perspective allows value-conscious investors to participate in world-changing innovation without speculating wildly.

Calico isn't operating in a vacuum. It is a leading and highly visible player in the burgeoning longevity industry. This field, focused on extending the healthy human lifespan (or “healthspan”), has attracted billions of dollars in venture capital and is at the forefront of biotechnology research. Understanding this context is important for investors. While Calico has the unique advantage of Alphabet's deep pockets and long-term patience, it faces competition from a host of other startups and research institutions. Its progress—or lack thereof—is a bellwether for this exciting and revolutionary new sector of the global economy.