Ginkgo Bioworks (NYSE:DNA) is a topic of conversation on Wall Street today for two reasons. First, the company has entered into a definitive agreement with Bayer (OTCMKTS:BAYRY) to acquire Bayer’s research and development (R&D) center. Also, Ginkgo Bioworks plans to acquire biotechnology company Zymergen (NASDAQ:ZY). DNA stock fell in today the wake of these developments.
There’s a lot for investors to absorb when it comes to Ginkgo Bioworks. For one thing, Ginkgo will acquire Bayer’s huge, 175,000-square-foot biologics R&D center. For roughly $83 million, it will get not only the site, but also the team, as well as the internal discovery and lead optimization platform from Bayer.
On top of all that, Ginkgo Bioworks entered into a multi-year platform collaboration with Bayer. Specifically, the two companies will advance several agricultural biological programs. Together, Ginkgo and Bayer will develop a “Joyn’s marquee nitrogen fixation program, as well as new programs in areas such as crop protection and carbon sequestration.”
DNA Stock Falls Despite Important Acquisition
In case all of that isn’t enough to absorb, Ginkgo Bioworks has also agreed to acquire Zymergen. It will be an all-stock transaction with a value of around $300 million.
Zymergen is described as a biotechnology company that “designs and produces molecules, microbes and materials for diverse end markets.” Its assets could be a good fit for Ginkgo’s business, which involves programming cells.
However, traders on Wall Street might not be so optimistic. So far today, DNA stock is down 4.6%. Thus, the bulls’ hopes of getting the stock above $3 probably won’t be realized today.
This brings an obvious question to mind: Shouldn’t the acquisition be considered positive news? Maybe, but it’s not unusual for a company’s stock price to decline immediately following acquisition-related news.
So, this story could still have a happy ending for Ginkgo’s shareholders. In time, investors might bid DNA stock back up after they weigh Ginkgo Bioworks’ exciting recent developments. For today, though, the price action is decidedly to the downside.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
