Shares of Ginkgo Bioworks(NYSE: DNA) were sinking 9.5% lower as of 11:34 a.m. ET on Friday. The sell-off came after the biotechnology company announced its fourth-quarter and full-year 2023 results following the market close on Thursday.
Ginkgo reported Q4 revenue of $34.8 million, down 65% year over year. This result was well below the Wall Street consensus estimate of $42.5 million.
The company posted a fourth-quarter net loss of $211.7 million, or $0.11 per share. The average analyst estimate was for a net loss of $0.10 per share.
What investors especially disliked about Ginkgo's Q4 update
It's not surprising that Ginkgo Bioworks' shares fell after the company missed estimates on the top and bottom lines. However, the biggest problem with its fourth-quarter update was its full-year 2024 guidance.
Ginkgo projects total revenue of between $215 million and $235 million this year. Cell engineering services are expected to generate $165 million to $185 million of that total, with biosecurity services raking in at least $50 million. The top end of Ginkgo's guidance range, though, is far below Wall Street's average revenue estimate of $279.6 million.
Is Ginkgo Bioworks stock a buy on the pullback?
Disappointing quarterly results can sometimes present great buying opportunities for investors. Is Ginkgo Bioworks stock a buy on the pullback? I don't think so.
Shares are already valued at a premium with a price-to-sales ratio of over 9.2. If Ginkgo's revenue was growing rapidly, that multiple wouldn't be too concerning. However, the company's sales are headed in the wrong direction. Ginkgo also remains unprofitable. My view is that there are plenty of stocks to buy that offer much better risk-reward propositions.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
