Do you know how many sharks had to die to produce your favorite moisturizer? It may be more than you are comfortable with, but it doesn’t have to be that way. This is because synthetic biology companies Gingko Bioworks Holdings (DNA 3.57%)and Amyris (AMRS -4.54%) engineer microorganisms that produce high-value ingredients used in cosmetics, food sweeteners, and pharmaceuticals, to name a few applications.
It wasn’t too long ago that Amyris and Gingko Bioworks were stock market darlings, but the rout in tech stocks this year has been particularly difficult for these two. Both have lost more than half their value in 2022 – leading value investors to wonder if these stocks could be bargains now. Let’s take a look at them side by side to see which one has the best chance of boosting your portfolio in the years to come.
Shares of this synthetic biology start-up soared after its stock market debut last year. The good times didn’t last long, however, and now Gingko Bioworks’ stock is down more than 80% from its all-time high.
This company’s fame is a cellular programming platform, which its customers can use to engineer new organisms that can consume raw materials like sugar cane and excrete something far more valuable. Gingko collects user fees plus royalties from sales of products made by these new microbes.
In some cases, Gingko takes stakes in companies that hire it to help design new organisms. This could generate significant cash flow in the future. So far, however, the company is losing money at a staggering rate. Gingko lost $591 million in the first quarter, largely because it absorbed a $582 million non-cash expense related to stock-based compensation.
Gingko reported first-quarter revenue that jumped 282% year-over-year to $168 million. Unfortunately, its COVID-19 testing segment produced all the gains, while foundry segment revenue actually fell about 5% year-over-year to just $21.5 million. . This pullback is particularly troubling as the easing of COVID-related containment measures is expected to fuel more demand for the company’s core business, not less.
This synthetic biology company has been around much longer than Gingko Bioworks, but age hasn’t stopped its stock price from plummeting this year. Amyris shares are down about 86% from their peak last summer.
Amyris also designs microbes that produce a variety of high-value ingredients for third parties, but makes much more money marketing its own beauty and wellness brands. Its most popular products today are squalene-containing moisturizers, which it sells under the Biossance brand. The company also launched five new consumer brands last year, including JVN, a hair care brand released in partnership with Jonathan Van Ness.
The company narrowed its first-quarter loss to $121 million from $289 million a year earlier. Product sales are growing so rapidly that they could become profitable within a year or two. Overall renewable product sales climbed 54% year-over-year to $43 million in the first quarter. Consumer sales more than doubled to $35 million.
The company’s new fermentation plant in Brazil is finally going into production this year. This could significantly reduce reliance on third-party manufacturers and help push the company’s bottom line into positive territory.
The best buy?
Shares of Gingko Bioworks are trading at around 8.5 times trailing sales. That’s more than twice as much as Amyris at the moment. Even if they had the same value in this regard, I would still choose Amyris.
You could argue that Gingko has a better platform to engage third parties trying to source sustainably produced ingredients. Amyris’ experience over the past years, compared to Gingko’s declining smelter revenues, tells us that designing new organisms and producing fermented ingredients for customers is not a reliable business model. With a proven ability to market its own sustainably produced products, Amyris is clearly the best stock to buy right now.