Boston-based Ginkgo Bioworks (NYSE:DNA) is a biotechnology company that’s advancing a platform for cell programming.
Reportedly, famous ARK Invest fund manager Cathie Wood bought a large stake in DNA stock not long ago. This doesn’t mean that you have to buy the stock, though, as Ginkgo Bioworks’ bottom-line results are only getting worse.
Sure, it might be tempting to jump into a trade when a celebrity investor’s busy buying millions of shares of a stock. However, you’re ultimately responsible for your money. Any losses will be your responsibility, so investors must conduct their own due diligence.
Ginkgo Bioworks will, in the end, sink or swim based on the company’s fundamentals. Therefore, investors should determine whether Ginkgo Bioworks is moving in the right direction, financially speaking.
If not, then you can choose to ignore what a particular famous fund manager is doing, and simply stay out of the trade.
What’s Happening with DNA Stock?
There have been brief pops along the way, but overall, DNA stock has been a poor performer. The stock is far from its 52-week high of $15.86 and was recently spotted trading below $3.
As they say, the trend is your friend. When it comes to Ginkgo Bioworks, though, the trend has mostly been friendly to the sellers. Nevertheless, this seemingly hasn’t deterred Wood, who became well-known for placing huge bets on disruptors and innovators.
Wood certainly has a large number of fans and followers, but her track record isn’t perfect. InvestorPlace Assistant Financial News Writer Shrey Dua observed “mounting losses” in many of Wood’s funds, but it seems that Wood is stubbornly sticking to her investment thesis and doubling down on DNA stock.
Wood evidently purchased 1 million shares of Ginkgo Bioworks not long ago. This was in addition to Wood’s prior hoard of over 92 million shares. Whether adding to her position in a relentlessly declining stock is confident, or just reckless, is up to you to decide.
Ginkgo Bioworks’ Bottom-Line Results Are Getting Worse
More important than whether Wood is buying DNA stock is the question of whether Ginkgo Bioworks is a financially sound business. After delving into the company’s financials, it’s difficult to answer yes to that question.
In 2022’s first quarter, Ginkgo Bioworks reported a net earnings loss that widened considerably. Shockingly, the company’s net loss deepened from $74.78 million in the first quarter of 2021, to $592.59 million in Q1 2022.
Fast-forward to 2022’s second quarter, and the fiscal picture is still dark and dreary. As it turned out, Ginkgo Bioworks’ net earnings loss widened from $54.46 million in the year-earlier quarter, to $670.57 million in Q2 of this year.
During that same time frame, Ginkgo Bioworks’ total cash and cash equivalents dwindled from $1.55 million to $1.38 billion. Maybe Wood’s looking at different statistics, but these data points make it difficult to justify a long position in Ginkgo Bioworks now.
What You Can Do Now
Buying shares of Ginkgo Bioworks is, in effect, trying to catch a falling knife. Just because Wood’s funds are buying the stock, doesn’t necessarily mean that it’s a good value.
The important thing is to closely examine the company’s financials and make your own decision. If you do that, you’ll surely notice Ginkgo Bioworks’ widening bottom-line loss and diminishing capital position. With that in mind, you can choose to ignore Wood’s purchases and just stay away from DNA stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.