Why Solazyme's 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 alternative fuel maker Solazyme (Nasdaq: SZYM  ) jumped as much as 22.7% today, after reporting earnings.

So what: Solazyme only reported $8.6 million in revenue, which was just short of estimates, and a loss of $0.37 per share, but it was excitement about the future that had investors buying today. The company announced the signing of a joint venture framework agreement with Bunge that plans to produce 300,000 MT annually by 2016. It also signed a strategic collaboration agreement to manufacture and market tailored algal oils with Archer-Daniels-Midland (NYSE: ADM  ) .

Now what: These kinds of agreements are certainly a step forward, but let's keep in mind that revenue was actually down in the quarter, and the company's losses are only growing. Buying Solazyme now is a bet that these oils and fuels will be a financial success, which we have little evidence of right now. I'm not buying into this stock until I see strong, consistent profits, so I'm definitely not a buyer today.

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


Read/Post Comments (2) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

DocumentId: 2115809, ~/Articles/ArticleHandler.aspx, 7/28/2014 11:01:34 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...