Top 3 Questions Going Forward on Origin Materials

This post is a follow-up to a prior blog post about Origin Materials

At this point, it's clear that Origin Materials stock (NASDAQ: ORGN) is in a bit of a purgatory. Following the announcement of a multi-year delay and a reduced capacity Origin 2 facility in Geismar, hundreds of millions of market value was erased. The current market cap sits at $198 million.


Just about $1.6 billion off the mark, ouch. Anyway, the damage is clearly done and rather than re-hashing the deconstruction of what went wrong, I find it best to look ahead and see if this thing can be salvaged. It all rests in the hand's of company management now. Can they right the ship? 

Here are my top three questions that I await to see answered. In no particular order:

1. Can the company balance sheet withstand possible damages from lawsuits?

By my estimations, there is at least four quarters worth of cash left on the balance sheet and the barrage of lawsuits the company is currently facing could be detrimental to those funds. Settlement could cost anywhere from $20-30M. It would be a major hit to Origin, whose business plan requires much capital going forward.

2. Will management secure the necessary funds for O2?

With a newly estimated $400M necessary for phase one of Origin 2, the future of the company requires continued funding. Whatever source it comes from: provisions from the Inflation Reduction Act, licensing agreements/partnerships, or a bond raise, this question of where the capital is coming from needs to be answered.

3. When will Origin 1 prove scalability?

It's clear that there are licensing agreements with other companies, which are awaiting test results from Origin 1. That aside, we await to see a public announcement of the first CMF successfully produced in Sarnia. The question of "can the tech successfully go from pilot to industrial scale?" needs to be answered by management with a resounding "yes!" I'm pretty sure it will, given the talent of the Origin team.

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