Share price of
), has been on the rise since it was committed $50 million from
Silicon Valley venture capitalist, Vinod Khosla. The operator of
the first North American commercial-scale cellulosic biofuel
facility was promised the fund to double the capacity at its
biofuels production facility in Columbus, Mississippi.
Following the vote of confidence from Khosla, whose private
equity firm Khosla Ventures LLC holds approximately 26% stake in
KiOR, prices soared through the roof. As a result, the stock shot
up 57.9% (or $1.06) on Thursday to close at $2.89. Also, the
traded volume of more than 8.6 million represents a whopping
1,311.2% increase over its 65-day average volume.
The wheels were set in motion on Sep 26, when KiOR announced its
plans to double production capacity at its Columbus, Mississippi,
cellulosic fuels facility by constructing the second plant. Per
company estimates, the $225 million project - christened Columbus
II - will take approximately 18 months of gestation period. The
new facility is another step forward in KiOR's long-term goal of
raising its annual capacity to 92 gallons.
The move comes at the most opportune moment for KiOR which has
lost more than half of its market capitalization year-to-date.
After a lackluster IPO in Jun 2011, the company opened its first
facility in Oct the following year. As of now, the Columbus
facility has an annual installed capacity of 13 million gallons
of transportation fuel sourced from wood waste and non-food
crops. The planned Columbus II facility will spike this to 26
million gallons annualized.
The cascade in share prices started after the company posted weak
production numbers for the second quarter of 2013 in August. The
company was able to ship only about 75,000 gallons versus its
targeted 500,000 gallons.
With Khosla throwing its hat into the ring for Columbus II, we
believe that raising the rest of the greenbacks for Columbus II
is going to be a straightforward affair. Our bullishness is
enforced by the recent enthusiastic market response for a
privately held biofuel developer, Cool Planet Energy Systems Inc.
Cool Planet's foray for funds was met with enthusiastic responses
from big energy players like
Kior currently carries a Zacks Rank #3 (Hold). However, biofuel
stocks such as
Green Plains Renewable Energy, Inc.
), carrying a Zacks Rank #1 (Strong Buy), warrant a look.
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