Solazyme was up 11% for the week, so far. And it's up an additional 12% just today. The company makes oils, using sugars and algae; these oils could transform the ingredients we use for transportation, cosmetics, and even food. The company is up after announcing that it has reached commercial-scale production at an Archer-Daniels-Midland plant in Iowa.
This small-cap and recent IPO has a lot of potential, though it's down a lot since it went public. So far, it has relied on partnerships for developing its products; it has one in place with Chevron , for example, to jointly research alternative energy possibilities. And it continues to receive development revenue from Dow Chemical and Unilever . This news shows that it's evolving into a real business.
This is a complex company to analyze, and its costs are currently outstripping its revenue growth. It also faces intense competition from well-capitalized oil companies that are investing in alternative energy. This is a very risky investment. So far, though, management appears to be taking the right steps to build the business.
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The article Why Solazyme Rocked This Week originally appeared on Fool.com.
John Reeves has no positions in the stocks mentioned above. The Motley Fool owns shares of Solazyme. Motley Fool newsletter services recommend Chevron and Unilever. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.