Boston-based Ginkgo Bioworks Holdings (NYSE:DNA) has announced pivotal changes to its corporate structure with a one-for-forty reverse stock split and significant updates to its corporate charter, according to a filing with the Securities and Exchange Commission (SEC) yesterday. The reverse stock split, effective immediately, consolidates every forty shares of common stock into one share. This move aims to boost the stock’s market value, making it more attractive to investors, while also aligning with corporate governance standards by introducing officer exculpation provisions.
The corporate charter amendments also include the removal of outdated provisions related to Ginkgo’s previous merger with Soaring Eagle Acquisition Corp. and the subsequent domestication process. These updates are intended to streamline the company’s charter to better reflect its current operations and strategic focus.
The decision to amend the charter and execute the reverse stock split follows a broader trend among companies seeking to optimize their capital structure and governance in response to market conditions. Shareholders approved the reverse stock split and the Officer Exculpation Proposal, alongside the Charter Updates Proposal, signaling significant support for restructuring efforts of Ginkgo Bioworks.
On the financial front, Ginkgo Bioworks reported a decline in cell engineering revenue to $36 million, marking a 20% drop from the previous year. Biosecurity revenue stood at $20 million, maintaining a 41% gross margin. Despite these revenue challenges, Ginkgo reaffirmed its full-year guidance, projecting cell engineering revenue between $120 million and $140 million. The company is implementing cost reduction measures anticipated to save over $85 million annually.
In response to these developments, BTIG has maintained a Sell rating on Ginkgo Bioworks’ shares, expressing concern over the company’s financial outlook and new initiatives. The firm noted that Ginkgo’s lab data as a service (LDaaS) might yield lower returns compared to its traditional cell programs. Additionally, BTIG highlighted the impact of recent workforce reductions as Ginkgo targets adjusted EBITDA breakeven by the end of 2026.
Ginkgo Bioworks holds a market capitalization of $519.22 million but faces significant financial hurdles. The company’s P/E ratio stands at -0.51, indicating a lack of profitability, while revenue has decreased by 43.45% over the past year. Despite this, Ginkgo maintains a high gross profit margin of 80.22%, reflecting effective cost management.
The firm’s cash position exceeds its debt, suggesting positive liquidity, but analysts remain wary of the high cash burn rate and uncertain profitability for the current year. The stock has experienced a sharp decline, with total returns dropping by 86.33% over the past year. Investors seeking deeper analysis can access additional insights on InvestingPro, which offers a comprehensive view of Ginkgo Bioworks’ financial health and market position.
Currently trading at $7.63, down $1.73 or 18.48%, Ginkgo Bioworks’ stock reflects ongoing investor concern amid its restructuring and financial performance challenges. For income-focused investors, the absence of a dividend may also impact investment decisions.
