The 5 Dumbest Things on Wall Street: Jan. 20
4. Here's To You Metabolix
We here at the Five Dumbest Lab want to say one word to Metabolix (MBLX) investors. Just one word. Are you listening?
Plastics. Yep, you got screwed by plastics.
Alright, technically it was bioplastics, but like Benjamin Braddock in The Graduate that lone word still won't provide much consolation or clarity to Metabolix stockholders who saw their worlds fall apart last Friday.Shares of the company sank 57% after agri-giant Archer Daniels Midland (ADM) backed out of their joint venture because of "uncertain" projected financial returns. The joint venture was created in 2006 to produce biodegradable plastics under the brand names Mirel and Mvera as alternatives to petroleum-based plastics. ADM plans to keep the Iowa manufacturing plant after the divorce. Metabolix, which apparently never saw the break-up coming, says it will walk away with the intellectual property rights. "Over the past few years, we have proven the technology at industrial scale and believe that we now have the opportunity to launch this business with a different business model," said Metabolix CEO Richard Eno in a statement. Listen Richard, we know there are no winners when a marriage ends, but it's clear who the loser is in this case. While we appreciate the brave face, it's obviously time for you to take that $72 million of cash on your balance sheet and move on. You spent a solid 6 years trying to make it work with ADM, and you only booked $1.1 million in revenue in the past 12 months. That's just sad. And as for relying on that $6 million Department of Energy grant you received last May, well, that's just not a sustainable business model even if you had viable supply source to replace ADM. But you don't. So don't even try and seduce us into your stock. Wait. You are trying to seduce us. Aren't you?
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