I’m gonna keep this straight and to the point. I’m sorry for posting this after what is shaping up to be 2 30% days.
LanzaTech (Nasdaq: LNZA) is a hopeful, tiny cap, carbon fixation company. They aim to convert CO2 to ethanol and other viable biofuels at the industrial scale. One of their subsidiaries, LanzaTech (now private) spun off in 2020. LanzaTech still maintains a 46% non controlling stake in LanzaTech. Here’s where it gets interesting.
LanzaJet just raised $47M at a $650M pre-money valuation, with proceeds coming from Shell and international airlines group. At the most basic level, LanzaTech’s 46% stake is worth $300M and they are trading (currently) at a 150M market cap. From my understanding, their core business is still burning cash and not worth all that much. The stock is insanely low float, pretty illiquid. Volume has picked up this week and I think it’s people coming to terms with this news.
In reality the true value of LanzaTech’s stake in Jet depends on Jet’s financials (unknown to public), structure of their ownership, among other factors. Their share price likely currently reflects primarily the value of this stake and risk of dilution in the future.
Buying into LNZA is a 3 leg parlay:
I) LNZA does not go bankrupt or delist
II) LanzaJet IPOs or is acquired // LNZA is acquired
\- LanzaJet needs to increase commercial SAF capacity & licensing
III) Dilution doesn’t completely destroy the realized value of (II)
I personally think SAF has a huge future, been holding this position for \~2 years now. If inflation reduction act-like policies for alternative/biofuels can be put back in place she’s got a real fighting chance.
Position: a measly 100 shares LNZA @ 12.47/share