Following its mercurial ascent and dramatic fall from grace, special purpose acquisition companies (SPACs) again dominated headlines with LightJump Acquisition (NASDAQ:LJAQ) initially bouncing higher on the midweek session. The blank-check firm’s management team announced its shareholders approved a merger with Moolec Science, a food ingredient specialist. Though Wall Street first greeted LJAQ stock with enthusiasm, it eventually fell more than 46% in the afternoon hours.
On paper, Moolec offers a scientifically compelling narrative. Primarily, the company focuses on molecular farming. The process, according to Science Direct, is the “production of recombinant proteins in plants with the express intention to utilize (and ultimately commercialize) the protein itself rather than any trait or capability it confers on the plant.” In Moolec’s case, it develops animal meat through its disruptive plant-based technology, providing cruelty-free proteins for the food industry.
If the applied sciences firm succeeds on its main objectives, LJAQ stock could be a gamechanger. According to research by UC Davis, “Each year, a single cow will belch about 220 pounds of methane.” Because methane is 28 times more potent in warming the atmosphere, just the mere presence of these animals poses climate challenges.
Combine the above statistic with the elimination of animal cruelty and LJAQ stock becomes immensely attractive. To be sure, prior to the coronavirus pandemic, Forbes reported that more than 50% of millennials attempted to incorporate plant-based foods into their diet.
Not surprisingly, then, LightJump reported approximately 92% of votes cast approved the business combination. Management expects the transaction to close on Dec. 30., 2022, with the entity bearing the name Moolec Science. Shares and warrants should trade on the Nasdaq under the ticker symbols MLEC and MLECW, respectively, starting January 2023.
LJAQ Stock Entices But Significant Obstacles Remain
Theoretically, Moolec stands poised to impart a paradigm shift in the global food industry. As various researchers pointed out, the ongoing water crisis severely impacts food production. That’s because the processes involved in providing nutrition consumes large quantities of water. However, molecular farming may offer a holistically sustainable approach for the food industry, thus explaining initial enthusiasm for LJAQ stock.
Under traditional food-manufacturing processes, the procurement of fertilizers and the risks of associated groundwater contamination pose major concerns. However, molecular farming techniques may facilitate contained cultivation platforms, mitigating contamination risks and improving water consumption efficiencies. Thus, the aspirational angle for LJAQ stock appeals to forward-thinking investors.
At the same time, research published by the National Library of Medicine notes molecular farming doesn’t offer a panacea. Specifically, the “most challenging and cost-intensive aspect of recombinant protein production in plants has been [downstream processing], accounting for up to 80% of the total process costs.” And this is where investors need to exercise caution with LJAQ stock.
Citing data provide by Nielsen, the Good Food Institute notes that on average, “plant-based meat is 2x as expensive as beef, more than 4x as expensive as chicken, and more than 3x as expensive as pork per pound.” This unfavorable dynamic centers on smaller economies of scale. Though experts projected such scale should improve, plant-based meat products remain more expensive than their real counterparts.
Moving forward, then, perhaps the biggest challenge awaiting LJAQ stock is the underlying scale. Achieve financially sensible results and shares might skyrocket. Unfortunately, the market right now has a dim view on Moolec’s upside prospects.
On the date of publication, Josh Enomoto 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.
