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Why Zymergen's Stock Is Crashing (Again) Today

By Scott Levine – Aug 6, 2021 at 11:58AM

Key Points

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The momentum that the stock gained during Thursday's trading session couldn't be sustained.

What happened

Continuing the roller-coaster ride that it has been on this week, shares of Zymergen (ZY) are plummeting Friday. As of 11:12 a.m. EDT, the stock was down by 14.1%.

Two changes in the synthetic biology company's C-suite may be motivating some traders to sell shares, while others are likely exiting their positions in reaction to the challenges which the company addressed on Wednesday.

A man presents a down trending line graph to colleagues.

Image source: Getty Images.

So what

Zymergen announced that a pair of executives are joining its management team. First, the company has tapped Lincoln Germain as its new chief operating officer.  He will take the helm in the "rebuilding of the [c]ompany's commercial team, increasing the robustness of our market and customer value discovery analysis, and establishing a reliable sales pipeline qualification and forecasting process," the company said in a press release. In addition, Subodh Deshmukh will assume the role of chief development officer, responsible for overseeing product development.

It's likely, however, that the greater factor in Friday's share price dip is that the "Cathie Wood-effect" is wearing off.

On Thursday, Zymergen popped on the news that ARK Invest had bought shares in the wake of the stock's precipitous decline on Wednesday. Following Wood's lead, other traders took advantage of the stock's lower price. On Friday, however, day traders and those who are uncomfortable with the stock's volatility may be choosing to jump ship.

Now what

Germain and Deshmukh shouldn't take the stock's latest downward move personally. Investors are often uncomfortable with shakeups in corporate management. It will be interesting to see, though, if these additions to the leadership team can help right the ship at Zymergen after the manufacturing challenges it has recently faced.

Volatility like this is relatively common for growth stocks, and it's likely that the oscillations won't ease up too much in the days ahead. Those who find such roller-coaster rides uncomfortable would be well-served to look to other areas for portfolio picks. However, long-term investors who have positions in Zymergen shouldn't fret too much, and those who have the stock on their radars now have the opportunity to pick up shares at a better price than was available to them on Thursday.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Zymergen Inc. Stock Quote
Zymergen Inc.

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