Origin Materials Stock Takes a Shellacking - December 27, 2022

One For the Books

In what ended up being the biggest decline in the stock's 18 month trading history, shares of Origin Materials (NASDAQ: ORGN) closed down 11.94% on the day, at an all time low price of $4.35 per share. Trading volume was over double the 60-day average, with a total of 2.16 million shares changing hands. Needless to say, it was an ugly showing and this hideous chart pretty much sums it up:


Selling Speculation

While it is not clear by any direct evidence what drove today's selling, it could be a number of factors:

  • Retail investors capitulating/margin calls
  • Funds liquidating positions in the last week of the year
  • Short selling

Origin Materials is a pre-revenue company (for about another 6 months, as it stands now). Speculative stocks in such companies without any revenue would likely be first on the chopping blocks for funds, whose managers are forecasting a recession for 2023.

Interestingly, shares of Origin Materials seemed to trade in tandem with the likes of electric vehicle makers Tesla (NASDAQ: TSLA) and Proterra (NASDAQ: PTRA). Also joining in heavy declines was EV infrastructure company Volta Charging (NYSE: VLTA)


How Much Lower?

Everyone wants to know, "where is the bottom?" The bottom is zero (0), the lowest any stock can go to. In the interest of giving an actual number, let's take a look at book value: the valuation of a business according to its books. This number represents a theoretical value of what investors would get if a company sold all of its assets and paid off all its debts.


Taking numbers from the company's most recent 10-Q filing (for Q3 2023) -- $352,030,000 in stockholders' equity and 142,703,935 shares outstanding, a per share value of $2.47 is derived. In theory, if the company were to liquidate today, that's what it would be worth per share. This however does not consider the company's financial projections and future plans. Stocks are suppose to be priced looking ahead into the future, so I would say that $2.47 reflects the worst case scenario.

Three Days Left

The company has stated that it expects mechanical completion of its flagship Origin 1 facility in Sarnia, Ontario to be completed by the end of 2022. That leaves just three business days left to report the milestone. It's also possible that the facility could be mechanically completed and reported after the fact. Either way, investors want to see that management is sticking to their timeline and achieving each milestone on schedule. We already know that commissioning, which can be carried out before the last bolt is in place, is underway:


Weekly View

At this point, it appears to be a "falling knife" chart with no clear support in sight. A positive news release from the company could possibly provide a turnaround for the stock, but it also may be futile in the current market.


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

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