Sirwin
Sirwin

A Note on Origin Materials, 2/16/24


I thought it would be fitting to write a piece on Origin Materials, that will ultimately either serve as a continuation of the current obituary being written for the company or perhaps the start of a new and more hopeful chapter. In case you missed it, the company finally issued a press release. No news, but rather a date of the next earnings report.

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It has been the company's lone communication of 2024, outside of a post on X (the app formerly known as Twitter)

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It has been one of only two news releases since restructuring, by means of 30% workforce reduction, was announced in November 2023. Clearly, this is a new communication strategy for the company who previously used to pepper the market with press releases more often. The reasons for the silence are up for debate: new CFO, pending securities fraud litigation, pending partner deals.

If left to the imagination, a very grim picture could be painted. Chief Commercial Officer Stephem Galowitz left his role for a board seat and c-suite role at Sublime Systems, a company focused on low-carbon/non-petro based cement. Board memember and Artius co-founder Charles Drucker vacated his board seat, to resume his role as CEO of Worldpay. The list of notable departures certainly can continue. Massive exodus? It certainly would seem so, but not unexpected. The vacated roles are very much in line with the companies announced restructuring plan. Are they symptoms of a major problem, or growing pains for a small growth company looking to ramp up? I myself am inclined to think the latter.

With OM2 being pushed to the back burner for at least 3 years, does it make sense to keep extra employees on the books for a project that far out? Although undoubtedly painful, it appears the correct decision was made to keep the business afloat. What's missing is a financial forecast and a clear road map as to how the company will focus on higher value products in the immediate term. Where will these be coming from? What kind of margins will they carry?

There are many questions that need to be addressed before the cloud of impending doom will dissipate from the company and its stock. As of the last 3 months, I would say it is the continued uncertainty coupled with radio silence that has caused shares to crater to a new all-time low of 48 cents.

An earnings report that can at least focus on the company's outlook for 2024 & 2025 would be a good place to start a turnaround story. Management has stated that they are solely focused on execution, and the market is waiting to see the results of said execution. It's crucial not only to give investors confidence, but also to begin the organic recovery of the share price and edge back over a dollar a share, to avoid a situation that would necessitate a reverse stock split.

So, is it really over for Origin Materials? High-level talent departing, dwindling cash pile, unfunded OM2, lawsuits, and (of course) the share price would indicate that there may be trouble in West Sacramento. Perhaps that picture is not even close to what's happening at the sustainable materials company. Ultimately, more will be revealed on Leap Day 2024. Whether it's a hop in the right direction or a face-plant is anyone's guess at this point.


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RocketEnthusiast
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dot com boomer - writing mostly on crypto, stocks, entertainment, etc.


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