Cyanotech stock soars on ethanol speculation
False Internet rumors drive the per-share price up to 85 cents
Shares of Cyanotech Corp., a Big Island producer of nutritional products from microalgae, made their biggest percentage gain yesterday in nearly two years after several postings on an Internet message board linked the company's algae plants to a possible source of the alternative fuel ethanol.
The only problem? Cyanotech is not doing anything involving ethanol, and says it has no plans to start.
The Kona-based company's stock jumped 18.2 percent, or 13 cents, to 85 cents on volume of 871,700 -- more than 18 times its daily average of 48,087, according to Bloomberg data. That brought the stock's two-day gain to 34.9 percent after the shares rose more than 14 percent on Thursday.
The markets were closed Friday to observe Good Friday.
The last time the shares had a bigger percentage gain was on July 2, 2004, when they rose 24.8 percent. It also was the highest close for the stock since Nov. 3, 2005, when it finished at 92 cents.
The price move, and a sudden flurry of bullish postings on the Yahoo! Finance message board system, came in the absence of any actual announcement from the company involving ethanol.
In fact, yesterday, Gerald Cysewski, chairman, president and chief executive of Cyanotech, said the company intends to focus on its current products and that ethanol is a low-value commodity product that Cyanotech has no plans to develop.
"We've made no announcements that we are directing any research effort toward the production of ethanol from microalgae," Cysewski said. "Our mission remains to produce high-value natural products from microalgae. We expect to make no announcement of a change in that corporate philosophy."
Cysewski said if ethanol were used as a fuel at $2.50 a gallon, its price would equate to about 70 cents a kilogram. He said Cyanotech's current products sell from $19 to $500 a kilogram.
Ethanol, made by fermenting and processing grains, corn and sugar cane, can be used as an alternative fuel that allows people to rely less on petroleum-based gasoline. Algae cannot produce ethanol directly, but can be grown as a source of carbohydrates, which could be hydrolyzed and fermented into ethanol.
Cyanotech's three main products are BioAstin, a natural source of astaxanthin, which has been shown to be an extremely potent antioxidant as well as having anti-inflammatory properties; Spirulina, a whole microalgae rich in many nutrients, including antioxidants such as beta-carotene and zeaxanthin; and NatuRose, a source of natural astaxanthin for use in animal feeds.
The company is facing delisting from the Nasdaq SmallCap market if it does not comply with a Nasdaq-imposed deadline to boost its stock to at least $1 a share for 10 consecutive trading days.
The company has until May 30 to achieve compliance, but it could receive a six-month extension to meet that requirement if it maintains all other listing criteria besides the $1 stock price.
Cysewski said yesterday that the company remains in compliance with all the other criteria and likely would be granted an extension. He said if the stock is ultimately delisted, then the shares would trade on the Over-the-Counter Bulletin Board.
Cyanotech, which posted a fiscal third-quarter loss of $294,000 in the period ended Dec. 31, is expected to report its fiscal fourth-quarter and year-end results next month.
