On Wednesday, BTIG significantly reduced the price target on Ginkgo Bioworks Holdings Inc (NYSE: NYSE:DNA) to $0.20, a sharp decrease from the previous target of $0.50, while keeping a Sell rating on the stock. The firm's analyst cited the year-to-date share decline of 81% as a partial driver for the adjustment, suggesting that the recent drop is partly due to a sell-off in valuation amid challenges in forecasting revenue growth from new cell program additions in the coming years.
Ginkgo Bioworks recently announced in an 8-K filing that it plans to reduce its workforce by at least 35% across general and administrative (G&A) and research and development (R&D) functions. This reduction is estimated to affect approximately 400-500 full-time employees. Additionally, the company indicated that the reduction plan is expected to be "substantially completed in 2025." The timeline for these cuts has raised questions regarding the impact on employee morale, especially for those uncertain about their job security.
The company also disclosed that Anna Marie Wagner, a key leader who held multiple senior roles, including SVP, Head of AI, SVP, Head of Corporate Development, and Interim CFO, is among those affected by the job cuts. The departure of such a prominent figure has been noted by the analyst.
In an effort to streamline operations and reduce costs, Ginkgo Bioworks is planning to reduce its physical footprint by up to 60%. The consolidation of its core Foundry operations into the new Biofab1 facility is part of this strategic resizing. This move is seen as a response to the need for a more efficient and cost-effective structure amid the current challenges faced by the company.
In other recent news, Ginkgo Bioworks has faced a series of developments that have stirred the attention of investors and analysts. The company's Q1 results missed expectations, leading to a downward revision of its 2024 revenue guidance and a significant reduction in both headcount and physical footprint. This, in turn, prompted BTIG to downgrade the company's stock from Neutral to Sell. Similarly, William Blair downgraded Ginkgo's stock from Market Perform to Underperform, citing concerns over the company's quarter performance and its shift in business strategy.
Ginkgo Bioworks also received a noncompliance notice from the New York Stock Exchange (NYSE) due to the average closing price of its Class A common stock falling below $1 over a consecutive 30 trading-day period. However, the company's operations remain unaffected by the notice, and it is actively exploring options to address the stock price deficiency and comply with NYSE's listing standards.
Despite these challenges, Ginkgo Bioworks announced during its latest earnings call that it aims to achieve adjusted EBITDA breakeven by the end of 2026, supported by a $200 million cut in annualized run rate operating expenses by mid-2025. The company maintains a solid financial position with $840 million in cash and no bank debt, even as it reshapes its business model and introduces "lab data as a service" to expand its customer base.
InvestingPro Insights
In light of Ginkgo Bioworks' recent financial developments, certain metrics from InvestingPro provide a deeper understanding of the company's market position. As of the last twelve months, Ginkgo Bioworks holds a market capitalization of $707.83 million, with a strikingly high gross profit margin of 80.43%. Despite this, the company has experienced a significant revenue decline of 46.49% during the same period, underlining the challenges highlighted by BTIG in forecasting revenue growth.
InvestingPro Tips suggest the stock is currently trading at a low revenue valuation multiple, which could be of interest to value investors. Additionally, the Relative Strength Index (RSI) indicates that the stock is in oversold territory, which might attract traders looking for a potential rebound. However, analysts do not expect the company to be profitable this year, and the recent price performance has been concerning, with the stock having taken a substantial hit over the last week, month, and six months.
For readers interested in a more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/DNA. These tips could provide further insights into Ginkgo Bioworks' financial health and future outlook. Moreover, readers can use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription to InvestingPro, where they can explore more in-depth analytics and data to inform their investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.