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Here's Why Amyris Rose 10.5% Before Slipping Into Negative Territory Today

By Maxx Chatsko - Updated Oct 1, 2019 at 3:28PM

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The company filed its annual report for 2018 and gave a brief update on first-half 2019 operations.

What happened

Shares of Amyris (AMRS 11.77%) rose as much as 10.5% today before tumbling into negative territory, after the company made long-awaited financial disclosures. On the one hand, it's made a step in the right direction, which may allow shares to continue trading on the Nasdaq exchange although the company fell out of compliance in the last six months. On the other hand, the details of its annual report to the U.S. Securities and Exchange Commission (SEC), called a 10-K, are a bit troubling.

Today Amyris filed its 10-K, and provided a brief update on first-half 2019 operations in a press release. Tomorrow, it expects to hold a conference call to discuss first-half 2019 operating results, and file quarterly reports for the period with the SEC.

As of 2:56 p.m. EDT, the stock had settled to a 0.4% loss.

A man holds a white cardboard arrow that points up.

Image source: Getty Images.

So what

Among the details contained within the annual report for 2018:

  • Amyris reported revenue of $63.6 million and an operating loss of $136 million in 2018.
  • The accounting firm that completed the 10-K noted doubt about the company's ability to continue operating as a going concern, meaning Amyris doesn't have sufficient cash to fund operations or upcoming debt maturities.
  • Amyris had to restate financial results for all of 2017 and the first three quarters of 2018, after auditors uncovered errors in at least 13 different categories and calculations.
  • The business still isn't delivering consistent results from renewable product sales. It reported a negative gross product margin in 2018, meaning more money was spent manufacturing products than they generated in revenue. Amyris doesn't break out the performance of specific products, but the Biossance cosmetics brand, its most important product, appears to be doing well.

The business also disclosed in a press release that it generated first-half 2019 revenue of $77.1 million, although investors have no other details at this time. A conference call to discuss the results will be held tomorrow, while quarterly reports for the first two quarters of 2019 will be published with the SEC tomorrow as well. The financial results will not be disclosed in a press release.

Additionally, Amyris had until Sept. 30 to regain compliance with the Nasdaq requirements to remain listed. It's not quite clear whether the business met the deadline, or whether filings made today and tomorrow will put the company back into compliance.

Now what

Investors cannot overlook the fact that Amyris miscalculated revenue in 2017 and 2018 -- it was apparent that that was the case before management decided to take action. Investors can only hope that the business will begin to deliver on its lofty growth potential.

While everyone seems to be drooling over cannabinoid ingredients manufactured using genetically engineered yeast, the company has never consistently manufactured large-volume products at positive gross margin. Investors -- and Amyris -- should focus more on the consumer brands the company has developed, but cosmetics and baby products are unlikely to conjure up much excitement on Wall Street. Then again, a lack of execution doesn't get investors too excited, either.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

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