Why Ginkgo Bioworks Stock Is Sinking Today | The Motley Fool

Shares of Ginkgo Bioworks (DNA +1.92%) were sinking 8.3% lower as of 11:03 a.m. ET on Wednesday. The decline continued after the stock fell nearly 11% on Tuesday following two negative developments for Ginkgo.

Following the market close on Monday, the biotechnology company submitted a regulatory filing to the U.S. Securities and Exchange Commission (SEC) revealing plans to reduce at least 25% of its staff. Cathie Wood's Ark Innovation ETF (ARKK +2.65%) and Ark Genomic Revolution ETF (ARKG +1.46%) also disclosed on Tuesday that they sold shares of Ginkgo Bioworks.

I suspect the Ark Invest sales of Ginkgo stock worried investors more than the company's staffing cuts. Ginkgo announced in its first-quarter update on May 9 that it planned to reduce labor costs by at least 25%, so the SEC filing shouldn't have come as a surprise. However, Wood and Ark Invest have been champions for Ginkgo Bioworks for a while. The Ark Innovation ETF and Ark Genomic Revolution ETF added shares as recently as May 10.

The Ark Invest sales shouldn't be made out to be more than they are, though. The Ark Innovation ETF still owns more than 73.5 million shares of Ginkgo, while the Ark Genomic Revolution ETF still owns more than 41.7 million shares of the biotech stock.

Some investors might think Ginkgo Bioworks' sell-off presents a buying opportunity, but I'd be wary. The company continues to lose money. Its revenue plunged 53% year over year in Q1. I think investors will be better off staying on the sidelines with this beaten-down biotech stock.