Twist Bioscience TWST
Twist is a textbook Ponzi — price-dumping commodity DNA below cost, inventing a fake 'DNA chip,' masking negative gross margins via WorldCom-style accounting fraud. Target: $0.
Thesis
Scorpion Capital argues Twist Bioscience (TWST) is a Ponzi-like scheme destined for bankruptcy, drawing on 20 interviews with ex-employees, competitors, and customers plus a private-investigator field visit. Twist sells commodity synthetic DNA 50-90% below competitors — even undercutting Chinese labor-cost vendors — to buy revenue, funded by serial capital raises rather than operating cash flow. Its much-hyped 'silicon DNA chip' is branded a Theranos-style gimmick: the real workflow is manual, labor-intensive, error-ridden, with implausibly high rework. Scorpion believes reported 45% gross margins are fabricated via WorldCom-style misclassification — dumping COGS into R&D (60% of revenue) and capitalizing costs through a purported 'Factory of the Future' in Oregon that a PI found essentially deserted. Management is tainted: CFO Thorburn came from a 'prisoner-leasing' staffing firm and the pre-IPO largest holder links back through GF Securities to China's $12.7B Kangmei fraud. Target price: $0.
SCQA
Twist Bioscience is a publicly-traded synthetic DNA manufacturer with a $2.1B market cap, marketed as a disruptive 'silicon chip' biotech platform destined to industrialize DNA synthesis and scale into a 60%-gross-margin software-like business.
The chip story is a Theranos-style hoax masking a manual, error-plagued workflow; Twist subsidizes customers with 50-90% below-cost discounts and, Scorpion argues, fabricates a 45% gross margin by misclassifying COGS as R&D and capex.
Short the stock before the Ponzi-like capital-raise treadmill stalls; Scorpion points to a deserted 'Factory of the Future,' suspicious offshore Chinese investor ties linked to the Kangmei fraud, and a CFO from a 'prisoner-leasing' firm.
Target price $0: Scorpion slots Twist alongside its prior synthetic-biology shorts Berkeley Lights (-90%) and Ginkgo Bioworks (-78%), arguing FCF -136% of revenue and EBIT -127% make bankruptcy inevitable absent continued capital raises.
The three reasons
- 1
Silicon 'DNA chip' is a Theranos-style hoax masking a manual, error-ridden, loss-making workflow
- 2
Price-dumping 50-90% below competitors — even Chinese vendors — is an unsustainable Ponzi
- 3
Reported 45% gross margins are WorldCom-style fiction, hiding COGS in R&D and 'Factory of the Future' capex
Primary demands
- Short Twist Bioscience; target price $0 (bankruptcy)
- Scrutinize gross-margin classification: COGS misreported as R&D and capex
- Investigate 'Factory of the Future' capex and offshore Chinese investor ties (FCPA)
KPIs cited
Pattern membership
Precedents cited
- Scorpion short of Berkeley Lights (BLI) — down 90%
- Scorpion short of Ginkgo Bioworks (DNA) — down 78%
- Zymergen (ZY) — fell 72% in a day
- Theranos (lab-on-a-chip fraud)
- WorldCom accounting fraud (capex misclassification)
- Gen9 (failed DNA synthesis peer with negative margins)
- Kangmei Pharmaceutical $12.7B fraud (GF Securities)
- Bernie Madoff / Elizabeth Holmes analogy
Composition what's on the 236 slides
Slide gallery ·
Notes
Scorpion Capital's third 'synthetic biology' short report (after Berkeley Lights and Ginkgo Bioworks). 236-page layered thesis: price-dumping → fake 'DNA chip' → WorldCom-style gross-margin fabrication → deserted 'Factory of the Future' → FCPA red flags via Chinese investors linked to the Kangmei fraud. Heavy use of highlighted ex-employee/competitor quote extracts as primary evidence. No stake disclosed — only 'short' posture stated in disclaimers. Memorable rhetorical devices: 'Bernie Madoff and Elizabeth Holmes secret love child' framing of CEO/CFO; 'shipping a $20 bill with every order'; 'suicide bomber blowing off its own limbs.' Visual design is functional sans-serif PowerPoint with red highlights and screenshot exhibits — not editorial craft, but clean.