Do you know how many sharks had to die to produce your favorite moisturizer? It may be more than you're comfortable with, but it doesn't have to be that way. That's because synthetic-biology companies Gingko Bioworks Holdings (DNA +2.38%), and Amyris (AMRS +0.00%) are designing microorganisms that produce high-value ingredients used in cosmetics, food sweeteners, and pharmaceuticals, just to name a few applications.
Not long ago, Amyris and Gingko Bioworks were stock-market darlings, but the rout in tech stocks this year has been especially tough on these two. Both have lost more than half their value in 2022 -- which has value investors wondering if these stocks could be bargains now. Let's look at them side by side to see which has the best chance of pushing up your portfolio in the years ahead.
Image source: Getty Images.
Gingko Bioworks
Shares of this synthetic biology start-up shot higher following its stock-market debut last year. The good times didn't last long, though, and now Gingko Bioworks stock is down more than 80% from its all-time high.
This company's claim to fame is a cell-programming platform, which its customers can use to design new organisms that can consume feedstocks like sugar cane and excrete something far more valuable. Gingko collects usage fees plus royalties on sales of products produced by these new microbes.
NYSE: DNA
Key Data Points
In some cases, Gingko takes equity stakes in the companies that hire it to help engineer new organisms. This could lead to significant cash flow in the future. So far, though, the company is losing money at a staggering pace. Gingko lost a whopping $591 million in the first quarter, largely because it absorbed a noncash expense of $582 million related to stock-based compensation.
Gingko reported first-quarter revenue that soared 282% year over year to $168 million. Unfortunately, its COVID-19 testing segment produced all of the gains, while revenue from the foundry segment actually fell about 5% year over year to just $21.5 million. This backslide is especially troubling because relaxation of COVID-related lockdowns should fuel more demand for the company's core business, not less.
Amyris
This synthetic biology company has been around a lot longer than Gingko Bioworks, but age hasn't protected its stock price from falling this year. Shares of Amyris are down around 86% from the peak they reached last summer.
OTC: AMRS
Key Data Points
Amyris also designs microbes that produce a variety of high-value ingredients for third parties, but it makes a lot more money marketing its own beauty and wellness brands. Its most popular products at the moment are squalene-containing moisturizers, which it sells under the Biossance brand. The company also launched five new consumer brands last year, including the already successful JVN, a brand of hair-care products marketed in partnership with Jonathan Van Ness.
The company narrowed its first-quarter loss to $121 million, from $289 million in the previous-year period. Product sales are growing so fast that it could achieve profitability in another year or two. Overall sales of renewable products soared 54% year over year, to $43 million in the first quarter. Sales to consumers more than doubled, to reach $35 million.
The company's new fermentation plant in Brazil is finally beginning production this year. This could greatly reduce reliance on third-party manufacturers and help push the company's bottom line into positive territory.
The better buy?
Gingko Bioworks stock has been trading at around 8.5 times trailing sales. That's more than twice as high as Amyris at the moment. Even if they were equally valued on this yardstick, I'd still choose Amyris.
You could argue that Gingko has a better platform for engaging third parties that are trying to source sustainably produced ingredients. Amyris' experience in years past, compared to Gingko's backsliding foundry revenue, tells us that engineering new organisms and producing fermented ingredients for clients isn't a reliable business model. With a proven ability to market its own sustainably produced products, Amyris is clearly the better stock to buy right now.
