Twist Bioscience Stock Slides as Earnings Miss Overshadows Revenue Beat

Twist Bioscience (NASDAQ: TWST) shares fell more than 10% in pre-market trading after the company reported mixed fiscal third-quarter results. While revenue surpassed expectations and guidance was strong, a wider-than-expected loss prompted investors to sell shares of the high-flying stock.

A Mixed Report Card

The synthetic DNA manufacturer announced fiscal Q3 revenue of $118.4 million, a 23% year-over-year increase that beat the consensus estimate of $114.54 million. The result marked the company's 14th consecutive quarter of sequential revenue growth. However, the bottom line disappointed investors.

Twist reported an adjusted loss per share of $0.56, which was significantly wider than the anticipated loss of $0.48. This marks the third time in the last four quarters that the company's earnings have missed expectations. Adjusted EBITDA for the quarter was also negative, at approximately $11.3 million.

Looking ahead, Twist provided fourth-quarter revenue guidance in the range of $123 million to $124 million, ahead of the FactSet estimate of $117.4 million. While positive, the strong outlook was not enough to offset the concerns about current profitability.

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Valuation Concerns Take Center Stage

The negative reaction to the earnings miss is amplified by the stock's recent performance. Shares of Twist Bioscience had surged more than 200% year-to-date, creating high expectations and a stretched valuation.

The market's sensitivity to profitability was highlighted by a recent analyst action. On July 6, Evercore ISI downgraded the stock to In Line from Outperform, with analyst Vijar Kumar noting that "the short term is getting ahead of itself" due to valuation concerns. The Q3 earnings miss appears to validate that cautious stance.

Today's decline is specific to the company, as the broader market offered no headwinds. The S&P 500 and Dow Jones Industrial Average were both trading higher, indicating that the selling pressure on TWST is a direct response to its financial report. Investors now appear focused on seeing a clear path to profitability before supporting the stock's elevated valuation.