Why Solazyme Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biofuel maker Solazyme (Nasdaq: SZYM  ) climbed 11% on Tuesday after announcing a joint venture with agribusiness Bunge (NYSE: BG  ) to build a renewable tailored oils plant in Brazil.

So what: The joint venture will have an impressive annual production capacity of 100,000 metric tons of oil. While financial terms of the deal weren't disclosed, the smallish Solazyme will be able to leverage Bunge's strong presence in sugar and vegetable oil markets, huge scale, and experience in Brazil.

Now what: Don't let today's pop keep you from looking into Solazyme. "The JV's commercial-scale production facility in Brazil will provide Solazyme with the capacity we need to produce renewable tailored oils to meet the strong demand we're seeing in our initial target markets," said CEO Jonathan Wolfson. With the stock still off about 40% from its 52-week high, it might not be too late to bet on those tailwinds.

Interested in more info on Solazyme? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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  • Report this Comment On April 03, 2012, at 1:37 PM, seattle1115 wrote:

    This announcement merely confirms the framework agreement announced in August of last year. I'm amazed (happily so, under the circumstances) that this development wasn't baked into the share price all along.

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Related Tickers

11/28/2014 12:59 PM
SZYM $2.30 Down -0.35 -13.21%
Solazyme CAPS Rating: ****
BG $90.77 Up +0.97 +1.08%
Bunge Limited CAPS Rating: ****

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