2023-11-14 07:05:00 ET
Ginkgo Bioworks (NYSE: DNA) stock price is nearing the lowest level on record as its revenue and profitability metrics remain under pressure. The shares have also plunged after signs emerged that its insiders were selling the stock.
Ginkgo Bioworks is a company backed by the likes of Bill Gates, Cathie Wood, and Scottish Mortgage. The company has developed a platform for cell programming that can be used across segments like agriculture, pharmaceuticals, industrials, and specialty chemicals.
The firm also owns Concentric by Ginkgo, a unit that is building a global infrastructure network for governments and public health leaders. The goal is for these entities to use these resources to handle biological threats.
Ginkgo Bioworks has come under intense pressure in the past few months. For one, its stock has plunged by almost 92% from its all-time high. In this period, it has dropped from over $15 to the current $1.
This performance is mostly because of its weak financials. Like T2 Biosystems ,the company has seen weak revenue growth as the Covid-19 pandemic ended. In the most recent quarter, Ginkgo Bioworks said that its total revenue dropped by 16.5% YoY to $55.43 million.
Most of this revenue came from its cell engineering business, whose revenue came in at $37 million. Biosecurity revenue was about $18 million while the total adjusted EBITDA was negative $84 million.
Ginkgo also downgraded its revenue forecast. It expects its cell engineering revenue to be between $145 million and $150 million. Its biosecurity revenue is expected to be about $110 million.
Ginkgo Bioworks stock chart
These numbers mean that the company’s business is not doing well. In 2022, its total revenue stood at over $477 million, down from over $313 million in the previous year. Even in its best times, Ginkgo had profitability problems as it made a net loss of over $2.1 billion in 2022.
Meanwhile, investors are also concerned about insider transactions as the stock plunges. Data by Barchart shows that Ginkgo’s insiders have dumped over 3.7 million shares in the past three months and 12.2 million in the past 12 months. The total value of these stocks was over $38 million.
As I wrote in an article on Atlassian , insider sales are not necessarily bad since they sell for a variety of reasons. Some of them sell to diversify their portfolios while others sell to fund large purchases. However, it is usually not a sign of confidence among new investors.
Analysts are also not optimistic about DNA stock price. The most recent downgrade came from BTIG, who lowered their rating from buy to neutral.
So, is it safe to buy the Ginkgo stock dip? I believe that the company’s challenges will continue as its performance continues to deteriorate. For example, its cell engineering business has not been as successful as initially hoped. The other risk is that its losses are increasing as it funds its growth.
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