Consistent with the falling temperatures outside, investors are turning a cold shoulder to synthetic biology specialist Amyris (AMRS -11.07%) this week. As of the close of the trading session on Thursday, shares of Amyris have plunged 47% from their closing price of $14.09 last Friday.
While the major catalyst for the stock's decline is the company's uninspiring third-quarter 2021 earnings report, shareholders are also likely hitting the sell button in response to the company's capital raise as well as Wall Street's unfavorable take on the stock.
Beginning the week on an inauspicious note, Amyris reported third-quarter 2021 earnings after the market closed on Monday. To the market's chagrin, the company failed to meet analysts' revenue estimates. Similarly, the company's profitability also disappointed investors. For one, Amyris reported a slimmer gross margin of 37% in the recently completed quarter compared to 41% in Q3 2020. Further down the income statement, there was more cause for concern as the company reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of negative $26 million compared to negative $15 million in Q3 2020.
While the company celebrated the improved balance sheet that it had at the end of Q3 -- featuring a net cash position of $13 million as opposed to the $137 million in net debt it had at the end of Q3 2020 -- investors weren't impressed. The company announced yesterday that it had priced $600 million in senior convertible notes due in 2026. Investors are likely unhappy with the prospect of dilution -- as it's something familiar to longtime shareholders. Whereas Amyris had 18 million shares outstanding in 2016, it now has about 277 million shares outstanding.
Lastly, investors are responding to a reduced price target from Wall Street this week. On Tuesday, Roth Capital reduced its price target to $15 from $22 based on the company's poor earnings report and concerns about management's ability to execute, according to Thefly.com.
Although there are several factors contributing to the bears' reaction this week, patient investors may be rewarded as the company solidifies its ingredient production with new facilities in 2022. Thus, growth investors can pick up shares at a steep discount to where the stock was priced last week.