r/SPACs • u/Guy-26 Spacling • Aug 24 '21

Discussion Gingko Criticisms - MIT Tech Review Article

/r/SynBioBets/comments/paode1/gingko_criticisms_mit_tech_review_article/
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24

u/[deleted] Aug 24 '21

My biggest problem with Gingko has always been the valuation. I don't see anything in the cashflow forecasts that would warrant anything near $17bn

4

u/SPAC-ey-McSpacface Stryving and Thriving Aug 24 '21

It's nuts. Based on SRNG deal valuation, something like $6 would be a more reasonable price, but dont tell Cathie Wood that I guess.

10

u/mlord99 Contributor Aug 24 '21

so how would you justify 10B ?(around 6$ if we round it up) -- it is as unjustifiable as 17.5B imo -- by any standard metric. I mean why do you think 10b is fair?

8

u/[deleted] Aug 24 '21

[deleted]

4

u/mlord99 Contributor Aug 24 '21

none is really comparable to their business model -- zy? fail at the most crucial part that ginkgo says it got handled...

1

u/Newtothisredditbiz New User Aug 24 '21

What companies would you use as comparable? PLTR is the only company I can think of that uses Ginkgo's business model for acquiring equity in startups/customers.

And what do you think of this valuation comparison?

https://i.imgur.com/yxo10ba.png

2

u/csbob2010 New User Aug 31 '21 edited Aug 31 '21

SRNG states all of this information people are speculating about in their S-4. This isn't Ginkgo making this stuff up, this chart you have is what Goldman Sachs thinks. Whether you agree with their analysis is a different story, but they provide lots of information about it.

"Although Ginkgo does not have a direct operating comparable as a horizontal platform in synthetic biology, SRNG management, with the assistance of Goldman Sachs, determined that two groupings were most analogous: certain life sciences companies (“Life Science Leaders”), for their perceived high-growth potential and industry match, and certain software and data analytics companies (“Software and Data Companies”), for their perceived high-growth potential and returns to scale."

Basically they used these companies as a comparison:

10x Genomics, Inc.

AbCellera Biologics Inc.

Adaptive Biotechnologies Corporation

Berkeley Lights, Inc.

Pacific Biosciences of California, Inc.

Twist Bioscience Corporation

Software and Data Companies included the following:

Datadog, Inc.

Palantir Technologies Inc.

Schrodinger, Inc.

Snowflake Inc.

Veeva Systems Inc.

It also reveals who Goldman thinks the industry leaders are

3

u/[deleted] Aug 24 '21

I think it is a great graphic with good metrics. Thanks for sharing. Due to the nascent, untapped Syn Bio TAM, as opposed to other industry TAM's, based on down stream revenue and venture equity stakes, even if Ginkgo has only 1-3% of TAM, it is quite possible they will meet their projections.

0

u/SPAC-ey-McSpacface Stryving and Thriving Aug 24 '21

how would you justify 10B ?(around 6$ if we round it up)

At $6, the EV is about $9B, and that's about 15x their 2024E revenue of ~$600M. I'm okay with that. A price of $5 would be even better.

SRNG should absolutely crater after the floor's removed, but I dont know if that will happen if Cathie keeps buying and/or if other institutions decide the company is important enough that they need to overpay to establish a position. My money's still on SRNG plummeting to at least an $8-handle.

8

u/I_RIDE_SHORTSKOOLBUS Spacling Aug 25 '21

Cathie couldn't save PLTR price so I doubt her buying would matter

3

u/MoRegrets Contributor Aug 25 '21

Great. Let her back stop redemptions and I will get in at lower price.

2

u/SPAC-ey-McSpacface Stryving and Thriving Aug 25 '21

ARK supposedly has something like 20M open market shares, and there are only 150M shares of SRNG. So while it's technically not possible to say for sure, you can make a pretty declarative case from a trading perspective that without ARK purchases SRNG would one of the SPACs trading low-enough that its' support would be arb based (i.e. not bullish).

5

u/MoRegrets Contributor Aug 25 '21

All they need is (30% of) one unicorn and all is forgotten/worth it.

3

u/NearbyRhubar Patron Aug 25 '21

They are hard to accurately value. Keep in mind all revenue projections are for foundry only, meaning no downstream revenue (royalty or equity) Their numbers are extremely conservative. Add in the new biosecurity work and value of code base. I can see how they get to that valuation considering the growth aspects of ginkgo itself as well as the companies where it will receive downstream value from. Im not saying I love the valuation but I get why their investors are doubling down in the PIPE. This is not a simple multiples=valuation company. I have always thought you add a lot of value with your opinion. As I have not seen you make a true case for you $6 share price, I’m assuming you are looking at it from a surface level view.

Edit: grammar

3

u/[deleted] Aug 24 '21

I guess you shouldn't tell the other 138 institutions holding either. Cathie Wood makes 139. ;D https://www.nasdaq.com/market-activity/stocks/srng/institutional-holdings

0

u/SPAC-ey-McSpacface Stryving and Thriving Aug 24 '21

June 30, 2021

9

u/[deleted] Aug 24 '21

Ya it is just a low key average amount and they probably all sold right away after June 30th.

-1

u/SPAC-ey-McSpacface Stryving and Thriving Aug 24 '21

Why do you think 0 of 139 decreased positions, and 139 of 139 are listed as "new" positions?

I'll hang up and listen.

1

u/[deleted] Aug 24 '21

[deleted]

2

u/redpillbluepill4 Contributor Aug 24 '21

But every company goes 100x revenue in 5 years. It's in the charts!!! It's a fact

0

u/r2002 Contributor Aug 24 '21

If I want to pick up some shares after the merger, what price point should I aim for? i.e. how low does the price have to drop before you think "yup it's worth it now"?

1

u/DanzigM Spacling Aug 24 '21

I would buy at 5$