This week has proven to be a rough one for investors in Ginkgo Bioworks (NYSE:DNA) stock. After announcing a $100 million public offering, DNA stock has lost more than 20% of its value in the past five days alone.
Zooming out, this stock has been on an even more dramatic trajectory. On a year-to-date (YTD) basis, DNA stock is now down more than 70%. Like many stocks in the Ark Invest portfolio of funds, this has been the case in 2022.
However, what’s notable about Cathie Wood’s exchange-traded funds (ETFs) is that certain stocks continue to get love from the growth-oriented investor. Ginkgo Bioworks is one such company that appears to be in vogue, at least for Wood.
Cathie Wood has continued purchasing DNA stock on the way down, most recently buying around 3 million shares through two ETFs yesterday, at very depressed levels.
Let’s dive into whether investors should take this as a bullish signal.
Is Now the Time to Load Up on DNA Stock?
There’s certainly a reason why so many growth investors continue to like Ginkgo Bioworks. This company’s focus on cell programming could provide innovative disruption to a host of industries. Thus, the potential for 15%-plus annual growth could be achievable over the long term, based on certain assumptions.
That said, right now, the market isn’t looking favorably on companies that are close to speculative bets on future growth. Ginkgo remains unprofitable and, as such, won’t be able to return value to shareholders for quite some time. With interest rates where they are and more attractive alternatives to high-growth biotech stocks, the company is significantly out of favor.
Cathie Wood may be one of the greatest growth investors out there. Her returns during the previous bull market were incredible. However, most investors are currently taking a defensive posture. Thus, DNA stock may not necessarily be the right fit for the majority of readers out there.
Ginkgo has had to raise growth capital as recently as this week. Thus, in today’s market, investors may want to be cautious buying shares of a company with significant dilution and balance sheet risk.
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On the date of publication, Chris MacDonald did not hold (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.