Why Are Shares In Zymergen Inc. Down Today?
It was a night to forget for Zymergen investors after the company dropped its co-founder CEO dismissed any hopes of near-term revenue.
Aug. 4, 2021
Zymergen Inc (NASDAQ: ZY) shares have plummeted close to 70% after hours following what must be one of the costliest press releases of all time.
The ‘biofacturing’ business firstly reported that co-founder and CEO, Josh Hoffman, was stepping down with immediate effect. This was followed by disturbing news that due to “issues with its commercial product pipeline that will impact the Company’s delivery timeline and revenue projections”, Zymergen was no longer expecting any product revenue in 2021. To top it off, a spokesperson concluded that product revenue was expected to be immaterial in 2022.
Just like that, hopeful prospects in the company, which only IPO’d in April, have had any hopes of near-term revenue dashed.
What does Zymergen Inc. do?
The world of biofacturing investing may not be the most exciting industry on Wall Street, but it is a growing one. Biofacturing (or biomanufacturing), is a type of manufacturing or biotechnology that utilizes biological systems to produce commercially important biomaterials and biomolecules for use in medicines, food and beverage processing, and industrial applications.
Zymergen prides itself as a “biofacturing company using biology to reimagine the world.” Leaving aside the Adam Neumann a la We Work-esque description, Zymergen offers a patented biofacturing platform that fuses molecular biology, data science, automation, and genomics to design, develop, and commercialize bio-based products.
How does Zymergen make money?
The global biotechnology market size was valued at $753.48 billion in 2020 and is expected to grow at a CAGR of 15.5% between now and 2028.
Zymergen currently only makes minimal revenue via research and development service agreements but is planning on developing its own products for sale. In its IPO prospectus from earlier this year, the company made clear its intentions to begin generating product revenue from a product it has been working on known as Hyaline.
Hyaline is an optical film, created using a biomolecule, that electronics companies can use for things like touch screens. The company’s current issues revolve around a delay in the manufacturing of this product, which is being developed to be sustainable, environmentally friendly, and low-cost.
It is unclear now as to when the product can actually be manufactured for sale.
Should I invest in Zymergen stock?
There really isn’t much to invest in just yet. The world of biomanufacturing is a complicated one, and we here at MyWallSt prefer to invest in what we know. That being said, for those who understand the industry well and can make an educated decision on the matter, it may be worth considering.
Biotechnology is a rapidly growing, but complicated industry. We believe that it’s important to only invest in what you know and believe in. If this isn’t for you, then don’t worry; MyWallSt’s got you covered with a shortlist of market-beating stocks, so you too can accumulate long-term wealth. Simply click here for free access today.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.