A Better Growth Investment: Ginkgo Bioworks vs. Shiba Inu

Sometimes the pursuit of growth leads investors to strange places. For example, Ginkgo Bioworks (DNA 1.96%) and shiba inu (SHIB 1.50%) are both investments that people are looking for exposure to a large increase.

But the similarities end there, and it’s important to understand why one of the pair is a much better option for almost everyone. That’s why.

Ginkgo’s growth story is beginning to gain momentum

Ginkgo Bioworks is a biotech that plans to grow by expanding its research and development (R&D) services platform using a combination of artificial intelligence (AI) and laboratory automation.

Management refers to this platform as a biofoundry in reference to microchip foundries in the semiconductor industry. If you’re unfamiliar with the term, you can think of a foundry as a type of business that focuses solely on capturing economies of scale in manufacturing rather than designing new products; customers bring the blueprints for whatever they want to make and pay the foundry to meet their specifications.

Unlike semiconductor foundries, the Ginkgo foundry is designed to create bioengineered microorganisms such as yeast and isolate their desired outcomes, such as ethanol or more complex biomolecules such as milk proteins.

For its target customers in the biopharmaceutical, agricultural, chemical and food industries, these capabilities are highly desirable, assuming the company can achieve its primary goal of offering its services at a much lower cost than what its customers would could do without his help.

So far, more than 76 companies – incl Novo Nordisk, Modern, Pfizerand Bayer — have collaborated with him. In total, he is working on 116 collaborations, with more likely to come. In the third quarter, this resulted in Ginkgo collecting $37 million from biofoundry activities, up 51% year-over-year.

There’s one important catch with this biotech: it’s not far from profitable, and it’s burning money with every additional program its biofoundry takes on. In the trailing 12-month period (TTM), its cash losses were over $405 million. But it has more than $1 billion in cash and equivalents, so it still has plenty of time to become more efficient.

The big question is whether management’s case for economies of scale at its biofoundry is true or false. He claims that servicing demand for certain types of foundry programs is becoming faster, more reliable and cheaper.

And while it’s true that its operating margin has been improving over the past year, it’s still deeply in the red. The risk for investors buying Ginkgo stock is that actual bottom-line growth will take a long time to achieve — or perhaps not at all if it’s harder than expected to achieve the desired performance in production.

Can the Shiba Inu still make new millionaires?

With a market capitalization of around $6 billion, Shiba Inu is one of the 20 largest cryptocurrencies. More than one trader made millions on his meteoric rise during the crazy cryptocurrency bubble of 2021, and there is nothing concrete that will stop such a rise in the future.

But the coin is currently priced around 87% below its all-time high at the end of October 2021. However, it is worth 11% more now than it was a year ago, suggesting that it really can be a reliable source of growth in your portfolio. The problem is that there is no remotely reliable mechanism by which the Shiba Inu can gain value.

If the meme investors can generate enthusiasm by creating increasingly stupid dog jokes, it will add up. On the other hand, if there isn’t a lot of money flowing into the crypto market as a whole, or if another coin has faster memes, expect the Shiba Inu to weaken and perhaps crash.

There is no management team here that is in any way accountable to investors, and there is no compelling growth narrative to increase the adoption of the coin. Nor does it have many valuable features that would strongly differentiate it from other cryptocurrencies.

It’s an easy call

Shiba Inu is a joke coin intended for meme-making fun and possible irresponsible financial speculation (gambling). Ginkgo Bioworks is a biotech working on a compelling (albeit unproven) business model and already has a lot of cash and buy-in from key players in its target markets. There isn’t much competition here; Ginkgo is by far the better growth investment.

But don’t take that to mean it’s a low-risk purchase. There is a real chance that it will need to raise more money by issuing more shares at some point, which is a risk if you buy it now. Still, it at least has a plausible path to becoming profitable and growing sustainably, and in the long run that means it’s a much better bet.

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