Hi everyone,
I have been observing the posts this weekend. For some people who jumped in, here is a starting point for you about the company.
1. The whole management team seems to have been fired and replaced within the last year
2. BioAmber seems to be behind on most of its financial metrics
3. The plant has a utilisation rate that sits at around 20%, and has for the past 2 years. What does that mean? It means that no one is buying their product. Its not a good sign.
4. They just recently made a public offering at 25 cents/share, but no one was buying it. They had to quickly drop the price to 0.15 cents a share to get any buyers and sold 48 million shares.
5. The past week has seen $2 million dollars of this stock traded.
6. They are being delisted from the NYSE and likely will be de-listed from the tsx as well.
Long story short; they built a 30,000 ton per year plant that is used about 20% of the time creating giant overheads and not enough product to yield any profit. There is a huge market for this product and previous management said they can make theirs cheap. So they have a cheap product that they can't sell into a giant market that apparently wants it? Says to me that the previous management/marketing team were/still are bad at business.
Flash forward to the most recent Quarterly update (Nov. 7th or something) and the CEO will not answer the question about plant utilisation rate, because essentially they are probably not using the plant still and are just hosing people while they try to make a turn-around.
I created the 20% utilisation rate myself by taking their revenue (3 million or something) and dividing it by the average cost per ton of succinic acid ($2300 - $2800/ tonne).
SO
Investment thesis - They get the plant running and life is good, hit their 60 million revenue targert bla bla bla everyone is happy, share price probably goes back up to $2-$3
Short thesis - Something is wrong with their product and management is hiding it. Its just a trade to be executed based on technical indicators.
My opinion? Likely poor product quality is hampering any real uses in the chemical industry which is why you see them pivoting to animal feed. Unless they can make a 99.99% pure product, its essentially trash, which is why you see them pivoting to animal feed uses.
FYI - animal feed is a low margin product, so I REALLY doubt they are going anywhere except into bankruptcy. Sorry guys, it sucks but its probably a bad investment.
If you bought in already I would hold, or sell and put my money into something else.
I have no stocks in BioAmber and do not plan on making any in the next 72 hours.