From Promise to Peril: The Downfall of Ginkgo Bioworks — Was It All Just Hype?

Court: N.D. California

Case: 4:21-cv-08943

IPO Hype and Lofty Valuation

Ginkgo Bioworks DNA went public in September 2021 through a SPAC merger, raising $1.6 billion and reaching a $30 billion valuation. Backed by high-profile investors like Ark Invest and Bill Gates’ Cascade Investment, the company touted itself as the “AWS of synthetic biology,” promising to capture a $4 trillion market.

By October 2021, its stock hit $15, and optimism surged on the back of high-profile partnerships and bullish statements from CEO Jason Kelly.

Scorpion Capital’s Report and Market Fallout

In October 2021, Scorpion Capital released a scathing 175-page short report labeling Ginkgo a “colossal scam.” The report alleged that 72% of Ginkgo’s 2020 revenue—and nearly all deferred revenue—came from related-party transactions with companies funded or managed by Ginkgo executives. It also claimed that 9 of 10 projects failed and accused the company of inflating success through publicity.

Shares fell 12% the same day, and momentum evaporated as the DOJ opened an investigation in November 2021.

Lawsuits, Investigations, and a $17.7M Settlement

Investors sued Ginkgo in November 2021, alleging securities fraud and failure to disclose related-party revenues. The DOJ inquiry and Scorpion’s findings fueled skepticism, though an independent internal review later found no evidence of fraud or reporting violations.

Despite these reassurances, investor trust was shattered. In 2024, Ginkgo agreed to settle for $17.7 million, offering affected investors a chance to recover losses.

Collapse in Value and Lingering Challenges

Since its October 2021 peak, Ginkgo’s stock has lost over 97% of its value, with its market cap shrinking to $825 million. Much of its revenue surge in 2021–2022 came from COVID-19 testing, which collapsed post-pandemic, leaving its core synthetic biology business struggling.

With losses mounting and revenue halved since 2022, the company now faces an uphill battle to prove its model is viable. For investors, the Ginkgo case highlights the dangers of lofty promises, opaque financials, and overreliance on related-party deals.