Origin Materials Sunday Wrap-up (December 18, 2022)

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

1 year ago

In community: Just Write(e5e5)

Topics: Investment, Stock Market, Financial, Technology

Good evening everyone. In case you haven't noticed, rather than post a regular weekly update on Origin Materials (NASDAQ: ORGN), I have decided to just post the information as it becomes available. I will try my best to post as soon as new developments arise, but always check the official investor section on their website for official company news. A lot of the content that I post here may be speculation, opinionated, and/or unofficial. Do not consider it investment advice; always perform you own due diligence.

Investors Speculate on Licensing Deal

A member of the raucously suggestive yet surprisingly informative Origin Materials Stocktwits message stream recently posted a StrawPoll, asking when everyone thinks the first licensing deal will be announced:

So most voters, though only 18 ballots were logged, believe that the first licensing deal will come next year. Interestingly, the second most votes are for 2025, which is when the Origin 2 facility is expected to be operational.

Officially, to date, there have been more than a few mentions from Origin Materials officials regarding licensing their proprietary technology to other companies. The first comes from the investor FAQ:

In addition, mentioned in the most recent (and many previous) 10-Q filing:

Going back in time, here's a snippet from an interview John Bissell did with Industrial Biotechnology in April 2021:

So, fast forward 20 months, and the company has nine times the backlog of orders, totaling $9 billion. I think it's pretty safe to assume that a licensing agreement will happen. The question that's on everyone's mind is: what will the timing of it be? Hence the StrawPoll! If you have read the job postings closely, something may already be in the works.

Video of LSBC Confirms Vote

As if phone calls weren't enough, the proof is now out in the pudding. You may see and hear it for yourself, via a video of the Louisiana State Bond Commission's December meeting. If you want to skip ahead, just go to the 11:30 mark.

I will now copy & paste from one of my previous blog posts to rehash what comes next:

There is now a period of 30 days to pass in order to allow for anyone to file suit to object/prevent the issuance of the bonds. During that time period, the bond counsel will establish a closing date and prepare the closing documents. The closing date could be as early as January 15, 2023. It will likely take more time than that, however.

At closing, the purchase price of the bonds are exchanged for the bonds and the amount raised from the bonds (up to $1.5 billion) would the be deposited for the benefit of Origin Materials. Also at closing, the company would owe the closing fees to the Louisiana Public Facilities Authority and Bond Commission. At this point, it is unclear how much the closing costs would be on $1.5 billion of bonds.

The company has cash, cash equivalents and marketable securities in the amount of $362.2 million as of September 30, 2022. They are also set to potentially receive $100 million in incentives from the state of Louisiana and Ascension Parish. The 150-acre land site for the Origin 2 facility has already been paid for.

Weekly Chart

What appeared to be a strong start to the week was quickly hammered on Wednesday by the Fed's latest decision on monetary policy. The surprise of the expected fed funds rate to hit 5.1% in 2023 seems to be what spooked markets and sent stock tumbling on Thursday and Friday. Shares of Origin Materials were no exception.

The news of the bond authorization on the 14th did nothing for the stock, despite being a positive news item for the company. Still, an uptick in trading volume can be noted for the past week.