Long-time readers with very long memories may remember that several years ago, I wrote here about stock in a company called Amyris (AMRS). I was bullish on the stock at the time based on the core business and prospects of the company. That worked out pretty well, as it was under $2.50 when I wrote about it, then rose to over $7 just a few months later. A long period of volatility then ensued, with the stock jumping around between $2 and $6, but the real fun began late in 2020 when it got the meme stock treatment and soared to over $23.
Unfortunately, I was out of my long position well before that, but it was fun to see an old friend in the spotlight…until the crash that inevitably follows meme stock mania came. Unlike some that have gone through that though, including more famous examples like GameStop (GME) and AMC Cinemas (AMC), AMRS is not now trading significantly above where it was before all the madness began. Rather, like another that got the treatment, Bed Bath and Beyond (BBBY), it dropped back to the starting point and even beyond.
The reason for the complete collapse is actually quite similar in the cases of BBY and AMRS, too…liquidity. Not market liquidity in the stock you understand, but the kind of liquidity a company needs to stay afloat…cash flow. Amyris has a problem in that regard but, if you can look past that, it is a company that fits the changing times in which we live and that has enormous long-term potential.
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Long-time readers with very long memories may remember that several years ago, I wrote here about stock in a company called Amyris (AMRS). I was bullish on the stock at the time based on the core business and prospects of the company. That worked out pretty well, as it was under $2.50 when I wrote about it, then rose to over $7 just a few months later. A long period of volatility then ensued, with the stock jumping around between $2 and $6, but the real fun began late in 2020 when it got the meme stock treatment and soared to over $23.
Unfortunately, I was out of my long position well before that, but it was fun to see an old friend in the spotlight…until the crash that inevitably follows meme stock mania came. Unlike some that have gone through that though, including more famous examples like GameStop (GME) and AMC Cinemas (AMC), AMRS is not now trading significantly above where it was before all the madness began. Rather, like another that got the treatment, Bed Bath and Beyond (BBBY), it dropped back to the starting point and even beyond.
The reason for the complete collapse is actually quite similar in the cases of BBY and AMRS, too…liquidity. Not market liquidity in the stock you understand, but the kind of liquidity a company needs to stay afloat…cash flow. Amyris has a problem in that regard but, if you can look past that, it is a company that fits the changing times in which we live and that has enormous long-term potential.
They are a biotech company, but not in the medical or pharmaceutical sense. They got my attention here originally because they were involved in producing bio-diesel products used in jet and other fuels. That business hasn't taken off as anticipated yet (if you will forgive the pun!), but there is still enormous potential in the business.
In the meantime, Amyris is dependent on what started out as its core business, cosmetic products and fragrances derived from biomass materials, where they had a bit of a breakthrough this year when Ulta added some products to their online offerings in the UK and Europe. Two or three products on a website offering thousands probably won't make discernible difference to the bottom lone at Amyris anytime soon, but it will increase the company's profile and exposure, and that cannot be a bad thing.
I said earlier that you had to overlook liquidity problems at AMRS and, normally, that is not something I would ever suggest that anyone do. The two main goals of any corporation are survival and profitability and, obviously, you need to achieve the first before you can think about the second. There have been a few times in the recent past when that wasn't a given at Amyris, as supply chain issues put a massive squeeze on their cash flow. However, last week the company announced a new credit facility that gives them more time to recover. That was met with cynicism by the market, as indebted companies borrowing more money usually is. That is why, even though buying AMRS at around its current levels has been a good trade many times in the past, it is not for the faint of heart this time around.
As a play on a company surviving bankruptcy, this is basically an all or nothing play, which is something that I usually avoid. However, with a company like Amyris that has an ahead of its time product to which the world is slowly catching up, time is very valuable. Expansion in Europe and the new credit facility have bought them a little more of that valuable commodity, and if the overall risk appetite in the market becomes a bit more positive, you may see another significant pop in this once trendy, now forgotten stock.
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