Not that long ago, I wrote an article asking how long investors would tolerate the growth-at-all-costs business model of Twist Bioscience (NASDAQ: TWST). Shares have responded by soaring over 200% in 2020. I nailed it.
The DNA synthesis company has poured money into a rapid business expansion at the expense of profitability and operating cash flow, which has forced it to fund the business through stock offerings. That's not a sustainable long-term strategy, but it's one investors and Wall Street have come to accept in the era of cheap money.
As fiscal third-quarter 2020 operating results show, Twist Bioscience is doing an impressive job growing multiple parts of its business. Is that enough for investors to overlook the growth stock's expensive valuation?