Why Shares of Zymergen Are Plunging Today

What happened

After zooming higher yesterday, shares of synthetic-biology specialist Zymergen (NASDAQ: ZY) are moving swiftly in the other direction today. It seems that the usual suspects behind a stock's precipitous decline aren't present today. The company hasn't reported any concerning news, nor has an analyst announced a downgrade to the stock. Instead, it appears the stock's slide is the result of investors taking profits.

As of 11:54 a.m. ET, shares of Zymergen are down 8.5%, rising from their earlier decline of 11.4%.

So what

After shares of Zymergen soared 23% yesterday, investors seem content to collect profits and run during today's trading session. Like today, there wasn't any news from the company that can be attributed to the stock's rise. If anything, it appears that news related to a synbio peer, Ginkgo Bioworks Holdings (NYSE: DNA), is the catalyst.

A scientist works with a petri dish in a laboratory.

Image source: Getty Images.

Ark Invest CEO Cathie Wood has been adding to her position in Ginkgo Bioworks over the past couple of days. On Monday, for example, the Ark Genomic Revolution ETF and Ark Innovation ETF added 31,528 shares and 602,754 shares of Ginkgo Bioworks, respectively. Although the ETFs didn't pick up shares of Zymergen, investors likely interpreted Wood's actions as a bullish sign, portending an auspicious future for synbio.

Now what

The wild volatility Zymergen's stock is experiencing this week shouldn't come as much of a surprise. Oftentimes, growth stocks shoot up sharply and fall with the same alacrity as companies pioneer new fields -- a dynamic that is clearly playing out with Zymergen today and that will likely be seen in days to come.

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Scott Levine owns Ginkgo Bioworks Holdings, Inc. The Motley Fool owns and recommends Zymergen Inc. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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