Why Solazyme's Shares Plunged
Jul 5th 2012 3:58PM
Updated Jul 5th 2012 4:00PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of algae biofuel maker Solazyme (NAS: SZYM) fell 10% today after being downgraded by an analyst.
So what: Raymond James analyst Pavel Molkhanov downgraded the stock from outperform to market perform citing the stock's recent run-up as the cause. He had a $14 price target previously and said that now that the stock has hit the target, the risk-reward is no longer attractive.
Now what: At The Motley Fool, we don't take analyst upgrades or downgrades too seriously, and this short-term move shouldn't affect long-term investors' theses. I haven't liked Solazyme for a more fundamental reason: We have yet to see alternative fuels or other products become a sustainable, long-term business. It just isn't a risk I would be willing to take right now given the low cost of natural gas, a more well understood alternative fuel source than algae.
Interested in more info on Solazyme? Add it to your watchlist by clicking here.
At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.The Motley Fool owns shares of Solazyme. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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