Ginkgo Bioworks Plunges 24% After Short Seller Calls “Frankenstein Mash-Up of Worst Fraud”

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  • Ginkgo Bioworks shares fell 24% on Wednesday after Scorpion Capital claimed the company is a “Frankenstein mash-up of the worst frauds.”
  • Ginkgo went public last month via SPAC and counts Cathie Wood’s Ark Invest as an investor.
  • Scorpion claims the bulk of the synthetic biology firm’s revenue is based on accounting tricks.
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Ginkgo Bioworks shares plunged 24% on Wednesday after a short selling report from Scorpion Capital claimed the synthetic biology firm is a “Frankenstein mash-up of the worst frauds.”

Scorpion, which is the abbreviation for the recent IPO of PSPC, alleged that much of Ginkgo’s income was phantom or non-cash, and instead was based on accounting gadgets activated by a network of companies. screens. Scorpion based its claim on research and conversations with former and current employees of Ginkgo and the companies it works with.

“A senior employee [of one of Ginkgo’s customers] stated unequivocally that they had never paid Ginkgo cash for foundry services and were content to use “free” R&D credits as a result of Ginkgo and Viking investments, “the report says.

Ginko did not immediately respond to a request for comment.

Former short seller Andrew Left of Citron Research applauded Scorpion Capital’s research and said the company was “more of a ploy than a scam.” He said the valuation of the company was in part inflated by misaligned incentives from the parties that made it public, adding that it overshadows Ginkgo’s private finance valuation in 2020 by around $ 5 billion. On Tuesday, Ginko’s valuation was $ 23.6 billion.

“We cannot dispute the fact that the stock will likely be down 80% in abbreviated form,” Left said.

Such a drop would hurt investors like Cathie Wood’s Ark Invest, who currently owns $ 325 million from Ginkgo in its Disruptive Innovation ETF and Genomic Revolution ETF.

But if a sharp 80% drop in Ginkgo materializes, Ark Invest might be unfazed and instead buy the drop based on its previous investment activity.

In August, Ark Invest suffered a sharp decline in its holdings in Zymergen, another synthetic biology company competing with Ginkgo. Zymergen plunged nearly 80% in a single day after pushing back its significant revenue generation schedule due to product development issues.

In response to the sharp drop in Zymergen, Ark Invest bought more shares of the company rather than backing down. We will know if Wood is taking advantage of today’s drop in Ginkgo stock as soon as Ark publishes his daily trading activity tonight.

“Behind the hype, Ginkgo is a glorified contract research organization that engineers basic yeast strains, with a decade of spectacular failure in delivering anything of value to customers,” concluded Scorpio.

Ginkgo Bioworks share price

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