How to Buy Zymergen (ZY) Stock

Read our Advertiser Disclosure.
Contributor, Benzinga
January 6, 2022

Arguably the most groundbreaking company among recent IPOs (IPO), Zymergen specializes in synthetic biology. Specifically, this technology firm uses nature as a canvas, inspiring a range of disparate applications, such as adhesives based on the stickiness of mussels or developing flexible phone screens centered on the fluttering wings of a dragonfly.

Not surprisingly, Zymergen is a unicorn in waiting, with huge backers putting up significant funds during private investing rounds. Read on to learn how and why to invest in Zymergen and its technology.

When Did Zymergen IPO?

Zymergen IPO’s on April 21, 2021 at $31 per share.

Zymergen Financial History

According to a report from Benzinga staff writer Chris Katje, Zymergen intends to sell 13.6 million shares with a price range between $28 to $31 per pop. Analysts value the company at approximately $2.96 billion.

From its Form S-1 filing with the Securities and Exchange Commission (SEC), Zymergen demonstrated its aspirational nature. In 2019, the “biofacturing” firm generated $15.4 million in revenue, of which 86% or $13.2 million came from research and development service agreements. The following year, total top-line sales hit $13.3 million with 74% or $9.8 million from R&D service agreements.

Another factor to consider for prospective buyers of the ZY stock IPO is net losses. In 2019, Zymergen posted a net loss of $236.8 million, which increased to $262.2 million in 2020. Further, the accumulated deficit as of December 31, 2020, was $773.7 million.

Despite the lack of currently exhilarating financials, Zymergen enjoyed a successful track record in acquiring private capital. Over 5 funding rounds since January 1, 2014, the company raised $874.1 million. A major institutional backer is SoftBank (OTCMKTS: SFTBY), which has a history of supporting high-potential tech firms.

img_607f23157ea5d

In its last private funding round on Sep. 8, 2020, Zymergen raised $300 million.

After Zymergen IPO’d in April of 2021, its stock price plummeted in August of that year after announcing that its sales would be “immaterial” in 2022. Josh Hoffman, co-founder and CEO, was replaced, and the firm’s market cap sank to unimaginable levels, losing almost a billion dollars in a few days.

New CEO, Jay Flatley, said in a press release:

“We are disappointed by these developments, and the board and management team are focused on resolving the underlying issues to ensure Zymergen moves forward as a stronger company with a compelling operating plan. We are confident in Zymergen’s opportunities and prospects, although it will take longer to accomplish our goals than previously expected.”

As of January 2022, Zymergen was trading just under $6 per share—a 6th of its IPO price.

Zymergen Potential

Though recent IPOs are always tricky animals to figure out, Zymergen could very well make good on its hype for shareholders. For one thing, as Katje stated in his article, Zymergen believes the biofacturing market is worth $1.2 trillion. For context, this is slightly more than Mexico’s gross domestic product.

Second, if the tech firm reaches its goals, the organization would facilitate powerful implications for the global economy. On a broader level, Zymergen represents a paradigm shift in how we view manufacturing. Rather than disrupting nature, Zymergen works harmoniously with it, taking inspiration from the daily miracles of our planet and producing superior products at lower costs than traditional manufacturing processes.

Most importantly, the innovative firm claims that its making of biomolecules by fermentation is a safer protocol than manufacturing via petrochemistry. Here, Zymergen plays into several compelling tailwinds:

  • Demographics: Millennials and Generation Z represent the consumer demographics most willing to pay extra for sustainable products.
  • Politics: President Biden pledged during the 2020 election cycle that his administration will get America on the road to net-zero emissions by 2050.
  • Climate change: The United Nations recently warned that the world is “on the verge of the abyss” regarding changing global temperatures.

Nevertheless, you should be careful about diving into Zymergen stock without performing due diligence. In particular, management warned in its SEC filings that it has a history of operating losses and does not expect to be profitable for the foreseeable future—which was made even more apparent after developments from August of 2021, noting that the firm might not even have sales figures to mention in 2022.

How to Buy Zymergen (ZY) Stock

The process is easy. If you know how to buy stocks, you can join other retail investors in the Zymergen story. Below are the key steps to take.

  1. Pick a brokerage.

    Obviously, before you can participate in any kind of stock market transaction, you must first pick a brokerage. In the “analog” era, brokerages varied significantly on pricing. These days, thanks to the advent of mobile investing and trading apps, pricing has become standardized. Better yet, the incentives are largely the same, such as commission-free trading.

    Where does this leave you? Basically, you should pick a broker that best fits your lifestyle and ambition. If you’re already in a satisfying career and don’t have the time to watch over your portfolio constantly, then a trading app may be the most appropriate choice. On the flipside, if you’d like to develop your investing acumen, you should elect a comprehensive service.

  2. Decide how many shares you want.

    Deciding your share count comes down to preparation and risk management. While you can buy more shares to garner more profitability, keep in mind the opposite is also true — you can lose out tremendously.

    Secondly, whatever is your magic share count number, write this figure down and stick to your strategy. The last thing you want to do is to make the share count decision during the market session — when the emotions of the moment can cloud your judgment.

  3. Choose your order type.

    Before you pull the trigger on Zymergen, make sure to strategize ahead of time which order type to deploy.

    Bid: The bid is the maximum price a buyer will offer for a stock. It is always lower than the ask.
    Ask: In contrast, the ask is the minimum price that a seller will take. It is always higher than the bid.
    Spread: The bid-ask spread is simply the difference between the bid and ask price. Most importantly for investors, the spread represents liquidity. Narrower spreads indicate higher liquidity levels and therefore lower risk (because you should be able to find a buyer for your stock). Wider spreads conversely indicate lower liquidity and higher risk.
    Limit order: To acquire a stock at an exact, predetermined price, choose a limit order. Bear in mind that no guarantee exists that your target stock will reach this price, which means your limit order can be left hanging unfulfilled.
    Market order: To buy shares at the going rate, choose a market order, which automatically executes at the next available price. Buy orders fulfill at the (higher) ask price, while sell orders fulfill at the (lower) bid price.
    Stop-loss order: A stop-loss order is a protective function for your specific holding, which automatically exits your position at either a predetermined price or the next available price. Watch out for gap-down sessions, where a stock opens at a much lower price than the prior session’s close.
    Stop-limit order: To prevent the unpleasant surprise of a stop loss exiting you out of your position during a gap down, you can elect a stop-limit order, which executes only at a predetermined price. Stop limits have the same risk of unfulfillment as limit orders.

  4. Execute your trade.

    To execute your trade, follow these steps for a market order:

    • Select action type (buy or sell).
    • Enter the shares you want to acquire (or sell).
    • Hit the buy (or sell) button.

    A limit order follows the same steps, with the exception that you must enter your desired execution price.

Best Online Stockbrokers

Below is a list of the best brokers to consider.

Hype that Might Still Surprise

As an aspirational organization, Zymergen unquestionably carries significant risk. Mainly, its financial performance leaves much to be desired. Still, the core business of biofacturing and leveraging influences from nature is deeply profound. Best of all, Zymergen may end up sparking uncompromised innovation, delivering superior applications that are cheaper and more environmentally friendly.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.