Why Solazyme's Shares Jumped After a Big Loss

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 Solazyme (NASDAQ: TVIA  ) jumped as much as 10% today after the company reported earnings.

So what: First-quarter revenue dropped in half to $6.7 million, which was below the $8.5 million Wall Street expected. What got investors excited was an adjusted loss of $0.35 per share, which was $0.08 ahead of estimates.  

Now what: Solazyme has been posting massive losses ever since it became a public company and I don't see the good signs in a drop in revenue and another quarterly loss. No one is expecting the company to be profitable this year or even next, so it's difficult to see how investors can determine the value in the company. I would stay far away from this stock and make management prove that it can make money before buying into a technology that will never catch on.

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

Read/Post Comments (10) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On May 09, 2013, at 6:12 PM, rsinj wrote:

    Right on!

    You have to wonder what kind of Kool-Aid the folks pushing and investing in this garbage are drinking? This company/management and those who have already "invested" in it are all too happy to keep pumping to them.

  • Report this Comment On May 09, 2013, at 6:46 PM, EmFetch267 wrote:

    Stop actually being a fool... the concept is to be taken in jest.

    If you cant understand the impact of what was being said yesterday just admit it. Your sole focus on revenues and earnings demonstrates you dont have a clue whats going on. I sure hope youre short because youre about to be burned from the market thats starting to get it....

  • Report this Comment On May 09, 2013, at 9:16 PM, prmadm wrote:

    I wish I'd read that last sentence of the article first, "I would stay far away from this stock and make management prove that it can make money before buying into a technology that will never catch on." It's obvious the writer is negative on the company and product(s). I wonder if the writer is informed about all the collaborations this company has with major companies (Bunge, Archer Daniels Midlands, Roquette Freres, etc...). It seems these companies see a benefit to Solazyme's tailored oils and believe their technology will "catch on". Hasn't their Algenist line of cosmetics demonstrated that their technology is catching on? QVC and Sephora seem to think so.

    I think that management has been up front with their goals, and has consistently demonstrated their abilities to deliver with each completed milestone. Of course this a speculative investment that is bound to be a bumpy ride until profits are consistently generated. But for the long term investor willing to buy and hold, an investment in this company at this level will be greatly rewarding.

  • Report this Comment On May 09, 2013, at 9:42 PM, showmethemonet wrote:

    Shares did not jump because of smaller loss. This article FAILS at explaining anything.

  • Report this Comment On May 10, 2013, at 4:19 PM, TulipSpeculator1 wrote:

    If this is a "technology that will never catch on", this article needs to be sent to United Continental, the US Navy, Roquette, Bunge, and ADM immediately. All of these organizations have partnered with Solazyme and have come to the opposite conclusion.

  • Report this Comment On May 10, 2013, at 6:56 PM, lntwo wrote:

    Why will it "never" catch on?? Are you concluding this based on your understanding of their technology? markets? biz plan? Please explain.

  • Report this Comment On May 10, 2013, at 8:25 PM, brybat wrote:

    Companies are throwing a bone to SZYM just in case things work out. They have the money to do that. How much money can SZYM make when all those companies have bargain rate deals for SZYM"s future output? SZYM sold their future away to stay in business. Anyways, who is going to eat oil when they find out it comes from genetically engineered algae?

  • Report this Comment On May 12, 2013, at 5:37 AM, TristMich wrote:

    It is disconcerting to see that all of the replies to this article hold as much weight as the article itself.

    Here are the facts:

    1) Solazyme has successfully partnered with multi-billion dollar organizations. If this means or you (the reader) require it to infer that they've pulled the wool over the eyes over some of the biggest players in their respective sectors eyes, so be it. These are facts.

    2) Solazyme as a company is an organization that has invested 100% in synthetic biology. Their micro-organism of choice being fresh-water blue green algae. The majority of you have no idea what this means. 9% of you think this means "GMO", and while technically correct, 9% of you still are wildly off-mark (yes, I refer to the 90-9-1.. 90, the masses, have no idea, 9% struggle and think they get it and read crap articles like this one, and 1% of you accumulate when it hits its lows). To clarify what Solazyme does:

    In a nutshell, they have modified algae to instead of absorbing sunlight, using photons to provide the energy necessary to create starches (sugars), Solazyme has created (and subsequently patented) an algae genome (therefore, an algae) which eats sugar (of all types: cellulosic (think kior), sugarcane (think bunge), dextrose (think Archer Daniels Midland)) and creates triglycerides (fats/oils). When you read about Solazyme's atrophic algae, this is what they mean, I.e. their algae eats sugar and makes triglycerides, as opposed to algae that eats sunlight and makes sugar, as it does in the wild.

    "OK, so what", you say. Others of you kind of get it but still you really don't understand:

    For the first time in human history we have the ability to directly convert sugar (of any type) to fat/oil (of any type. This is important biologically because triglycerides hold the most metabolic energy per molecular weight than any other molecule. "So what?" you say: think world food shortage... Humans can now convert a pound of sugar into a pound of fat. Think about it. My coca-cola is nice, but my double quarter pounder with cheese really hits the spot...

    3) The most recent announcement requires that you understand the topography (layout) of the triglyceride molecule... Google is your friend... In a nutshell: whereas before Solazyme could only control which functional groups were attached to each triglyceride arm and how saturated each arm is, they can now control the positioning of each arm... This means that Solazyme is the proud owner of a micro-organism's genome by which they have a completely configurable triglyceride for an output.

    Still confused? BUY AND HOLD. Let the jokers watch this thing grow like Unilever and BMY.

  • Report this Comment On May 12, 2013, at 8:47 AM, sampson01 wrote:

    Bought initially at the IPO,,,,,then, I've dollar cost averaged all the way down to their all time low. Now, @ 10.31 per share, I'm up 5%. Let the good times roll BABY !!!!!

  • Report this Comment On May 13, 2013, at 12:43 PM, MrMystery44 wrote:

    As A Motley Fool subscriber, I was disappointed in the content of this article.

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