{ "docId": "019dd923-622c-750b-8b9a-1a3bea94baf9", "docSlug": "c358888161f0", "documentTitle": "Ginkgo Bioworks (DNA)", "authorId": "58_Scorpion_Capital", "authorName": "Scorpion Capital", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2021-10-06 00:00:00", "orientation": "landscape", "aspectRatio": 1.2941177, "pageNumber": 29, "pageCount": 175, "prevPage": 28, "nextPage": 30, "slideType": "villain_critique", "function": "name_villain", "density": "overcrowded", "nDataPoints": 4, "notes": "The slide uses a combination of financial analysis and qualitative expert/ex-employee testimony to undermine the company's business model.", "elementsJson": [ "paragraph", "quote_block" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-1a3bea94baf9/29", "deckHref": "/decks/019dd923-622c-750b-8b9a-1a3bea94baf9", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-1a3bea94baf9.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-1a3bea94baf9#slide-29", "components": [ { "bbox": { "h": 0.03, "w": 0.15, "x": 0.05, "y": 0.82 }, "kind": "callout", "text": "“Nothing special”", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0c4bdaf5-e652-46f2-b643-534bff5704e1", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.5, "x": 0.05, "y": 0.65 }, "kind": "callout", "text": "Covid-related revenue is unsustainable and testing is a commodity", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "11f55e41-3051-462a-b73b-012a0a1e9bab", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "Ginkgo reported $41MM of what appear to be “Biosecurity” cost of goods – suggesting a pitiful 6% gross margin on $44MM of 1H revenue for the segment.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-2b62-723f-b688-a4e7956791ee", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "gross margin: 6%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-2b62-723f-b688-afcfb23955ff", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.45, "w": 0.9, "x": 0.05, "y": 0.08 }, "kind": "paragraph", "text": "Ginkgo’s inability to execute on a single initiative except fundraising is stunning. In 2020, the company made a random pivot into COVID testing kits, a commodity business with a short half-life as the pandemic fades. Ginkgo of course applies a fancier label – “Biosecurity revenue,” which comprised 50% of its 1H 2021 revenue, with foundry R&D services as the other half. Even for a simple cost-of-goods business, Ginkgo reported $41MM of what appear to be “Biosecurity” cost of goods – suggesting a pitiful 6% gross margin on $44MM of 1H revenue for the segment, with free cash flow that we suspect is another fiasco, given undisclosed capital expenditure to kick it off. At its 1H business update on Aug 18th, Ginkgo already missed its COVID revenue projection as testing fades, leaving a massive comps headwind for next year, to the extent YoY comparisons with a fictitious P&L are even relevant. We note below that ex-employees mocked the company’s foray into low-margin testing.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "fa625f62-d99e-4aac-99b7-4a64e9c4392e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.05, "y": 0.68 }, "kind": "quote", "text": "“Covid testing was also just a ploy to get into pharma because for years they've tried to get into pharma and nobody wanted to work with them. It's still just like a commodity business that they're in, sort of NGS of viral samples; it's like the Quest Diagnostics and all these other labs, it's a race to the bottom for pricing and things like that. They've got some inflated revenues or short-term revenues but I don't see that as building long-term value.” –Former director-level employee", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ad889998-792e-4071-b6ff-0459d5c911a9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.85, "x": 0.05, "y": 0.55 }, "kind": "quote", "text": "“In 2020, we incurred significant operating and capital expenditures in launching our biosecurity offering, which includes COVID-19 testing products…” – SPAC prospectus", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "dda8f1f6-ac0e-45b3-a0d2-9d7520dd5614", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.85 }, "kind": "quote", "text": "“I don't even know why Ginkgo is doing Covid-19 testing. PCR testing, you can do that at any university lab, really at any company. It just requires a couple of DNA sequencers, I mean, Illumina instruments, nothing special.” – Former employee in a managerial role", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e38ddc45-2127-47aa-836f-131bb1aa4cea", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“In 2020, we incurred significant operating and capital expenditures in launching our biosecurity offering, which includes COVID-19 testing products…” — SPAC prospectus; “Covid testing was also just a ploy to get into pharma because for years they've tried to get into pharma and nobody wanted to work with them. It's still just like a commodity business that they're in, sort of NGS of viral samples; it's like the Quest Diagnostics and all these other labs, it's a race to the bottom for pricing and things like that. They've got some inflated revenues or short-term revenues but I don't see that as building long-term value.” — Former director-level employee; “I don't even know why Ginkgo is doing Covid-19 testing. PCR testing, you can do that at any university lab, really at any company. It just requires a couple of DNA sequencers, I mean, Illumina instruments, nothing special.” — Former employee in a managerial role", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-2b62-723f-b688-aa5754f40dcc", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.8, "x": 0.05, "y": 0.95 }, "kind": "source-note", "text": "Source: Scorpion Capital consultation calls with experts; Soaring Eagle Acquisition Corp prospectus 8/13/2021, https://www.sec.gov/Archives/edgar/data/0001830214/000119312521246097/d177007d424b3.htm", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c5637eba-5ba3-4d9c-a8aa-1f88cf9f3553", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 29, "from": 7, "beatId": "e2f93575-983e-42f9-ba25-92d6aaff36aa", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Villain Critique", "beatSlug": null, "evidence": "The deck critiques Ginkgo's founders and business practices.", "position": 0, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null }, { "to": 175, "from": 9, "beatId": "ffe290af-3a4f-4e06-8d60-dfbfc07d2e08", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Expose Contradiction", "beatSlug": null, "evidence": "The deck presents evidence contradicting Ginkgo's claims and highlighting potential wrongdoings.", "position": 1, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }