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Why Shares of Zymergen Are Skyrocketing Today

What happened

Rebounding from the 16% slide that they experienced last week, shares of Zymergen (NASDAQ: ZY) are soaring today as investors learn of an insider's significant acquisition of the company's stock.

As of 10:34 a.m. ET, shares of the synthetic-biology company's stock are up 8.5%, having given back some of the 13.8% gain they made earlier in the trading session.

Image source: Getty Images.

So what

Which insider is feeling particularly bullish on the company's prospects? It's none other than Zymergen's new CEO, Jay Flatley. According to a recent filing, Flatley bought 100,000 shares of stock in a transaction valued at $1 million, bringing his total position to 144,789 shares.

There are few things that motivate investors as much as when an insider such as Flatley puts his money where his mouth is. Consider the company's third-quarter conference call, during which Flatley attempted to inspire confidence that Zymergen was back on the right track, saying that the company had "focused our investments, restructured our development and research processes and now we're a pipeline of products that we believe capitalize on our capabilities and provide clear commercial opportunities." Back then, investors shrugged. But when he plopped down $1 million to increase his position, they took note.

Now what

Although insiders sell stock for a variety of reasons, there's usually only one thing they have in mind when they click the buy button: They see the stock rising in the future. It's unsurprising, therefore, that investors are following suit today. But that doesn't mean that all growth investors should follow Flatley's lead; plenty of risks remain, so only investors comfortable with risk should consider a position.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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