In a notable shift in investor sentiment, shares of Ginkgo Bioworks Holdings, Inc. (NYSE:DNA), a key player in the US Chemicals industry, have experienced a significant downturn over the past year. The company's stock value took a sharp 30% dive within the last month, contributing to an overall 52% decline over the year.
Despite the company's high Price/Sales (P/S) ratio of 7.9x, which stands out in an industry where half of the companies boast P/S ratios below 1.2x, investors are showing signs of concern. This elevated ratio is particularly striking given that Ginkgo Bioworks' revenue has been shrinking at a rate that surpasses the industry average.
The company has faced a substantial 40% decrease in revenue last year, yet it had previously demonstrated impressive revenue growth over three years. Looking ahead, analysts remain optimistic about Ginkgo Bioworks' prospects, forecasting an ambitious annual growth rate of 25% for the next three years—a figure that would significantly exceed the industry's expected growth rate of 10%.
This positive outlook may explain why Ginkgo Bioworks maintains such a high P/S ratio and why some shareholders are hesitant to part with their shares. However, for the stock price to sustain its current level, these revenue growth projections need to materialize.
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