Wall Street Darling Ginkgo Caught in SPAC, Short-Seller Selloff
(Bloomberg) -- In the world of biotechnology and SPACs, wild fluctuations in stock prices are pretty typical. For Ginkgo Bioworks Inc. and its who’s-who list of Wall Street backers, it’s been a rough two weeks that’s seen about $5 billion in market value wiped out.
The Boston-based company counts Viking Global Investors LP, Baillie Gifford & Co. and Cathie Wood’s ARK Investment Management LLC among its 10 biggest holders on hopes it will lead a synthetic biology revolution.
While early investors wait for those promises to materialize, the cell programming firm has embarked on a roller-coaster ride after its debut on Sept. 17, when it completed a reverse merger with Soaring Eagle Acquisition Corp., a special purpose acquisition company. Since then, the share price has dropped more than 7%.
To be sure, SPACS have also underperformed in the same time. The De-SPAC Index, a group of 25 firms that went public through combinations with SPACs, slid 14% since late last month and is now almost 50% lower from a February peak.
Ginkgo took another blow on Wednesday, at one point dropping as much as 24% after a short report from Scorpion Capital. The day’s tumble came as more than 60 million shares changed hands.
Ginkgo CEO Jason Kelly said the company is increasing the scale of its platform so it can deliver more cell programs to customers.
It remains to be seen how much investors such as Baillie Gifford or ARK will snap up during the latest decline. The stock had slumped in five of the past six days prior to Wednesday’s selloff -- with ARK adding to positions each day it traded in the red.
For Scorpion Capital, which sent fellow ARK-favorite Berkeley Lights Inc. spiraling last month to a record low, the short call centers on questions surrounding Ginkgo’s ability to generate revenue, and drew support from fellow short-seller Citron Research.
Ginkgo’s Kelly responded to the short report’s critique that startups are using Ginkgo to launch. “We don’t think that is a problem,” he said. “We’re happy we make it easy for companies to start on Ginkgo’s platform and hopefully more entrepreneurs hear about our platform today.”
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