Do not know if the thesis for the company has changed.
No public-known information that suggests that thesis for the company has changed. But the persistent share price drop is real and cannot be simply explained by general market down-turn IMHO. It dropped more persistently and in larger scale than the general small cap market. I think its current price is at least a 2-year low.
There are a few things we do know.
*) It has ample cash and so it is not likely there is an immediate/near term cash problem.
*) It has some amazing products that have big potential and are being sampled or in low volume commercial production
*) It has two new plants in ramp-up mode that would greatly increase revenue in 12-18 months
*) It has a technology platform on which they have launched and will continue to launch innovative new products
So why the sudden and drastic change of the sentiment? A few possibilities
*) Investors’ impatience. In a volatile market, some or many investors want to get rid of more risky stocks to get cash or rotate into less risky names. This may actually have a snowball affect as more investors see the price drop and become panic.
*) The market (big institutions/mutual funds/insiders) knows something that we do not know. But what could that be?
Here are my guesses. In their Q2 CC they said that the focus areas for the remaining of 2014 are
First, this continued progress on establishing and ramping production at our large scale manufacturing facilities. …
Is it possible the Moema plant is having ramp-up problems? In their Q2 CC, they said they
“… worked diligently and quickly to address these issues and put backup systems in place to reduce the likelihood and potential impacts of future disruption.”
So it sounds they didn’t completely fix the problems and there may be future disruptions. What would be the consequences of such disruption? Would equipment be damaged? Would the goods-in-processing be damaged? How much impact would be to the delivery schedule to the customers? Is it possible there have been one or more of incidents of this nature that disrupted processes and scared away potential customers or put the ramp-up in pause?
The second focus area is commercial activity. The progress we’ve talked about today including Akzo, the ramp in shipments out of Clinton/Galva, a new important food ingredients customer and additional distribution partners, progress with Encapso and further expansion of the Algenist distribution. …
Is it possible there has been a lack of customer response to their products?
I am not suggesting anything. I am just trying to see what could justify the seemingly excessive selling of the stock. IMHO, even if Moema plant has encountered such problems, it is still a speed bumper and does not change the investment thesis unless the plant is severely damaged or destroyed due to those incidents.
Or it is very likely there is nothing major. It is all part the market volatility driven by investor impatience. And to some extent this post may reflect the impatience on my part.