There are good reasons for this company to be interesting
- They have unique capabilities, designing and manufacturing renewable oils on the basis of a microalgae based platform
- The platform scales and is fairly robust and can (according to Kevin Quon) ["cost-effectively replace expensive processing steps now utilized throughout the industry."] One should consult the whole linked article for details.
- So their platform not only is cheaper, but enables the production of more oils: ["Economically speaking, there are only a small number of oils in this world, which can be efficiently produced and made in large enough supply to become reasonably priced for most products. There is an overall lack of characteristic diversity amongst this pool of well-known oils."]
But then again, there are things to consider. The market cap is over $800M, almost three times the 2015 projected revenues and analyst expect the company to still produce a loss in 2015 (20 cents a share), even though their two factories (one is already producing and the other will start somewhere in the first half of this year) supposedly run at full capacity. However, Quan argues that:
It is important to consider that even upon reaching nameplate capacity, Solazyme's full potential remains far from tapped. As portrayed in what was written above, Solazyme has only begun to introduce products that represent the base level of their value-added creativity. For now, the company is comfortable in increasing the yields of well-known molecules within established markets.
So this is only the beginning of the game. The aim is to move to 'designer oils,' that add value and produce higher margins.