$LNZA Deep Dive: LanzaTech's stake in LanzaJet isn't reflected in their valuation and a might warrant a 3-4x "conservative" upside from current price.
Grab a cup of coffee and let's do some napkin math (all estimates based on available public information and mostly being on the conservative side) that highlights a potential asymmetric opportunity due to market inefficiencies.
In June 2020, LanzaTech spun-off LanzaJet as a separate entity. Since then, LanzaJet has attracted world-class investors from various industries.
Big Tech: Microsoft (2x investor)
Big Oil: Shell (UK) and Suncor (Canada)
VC: Breakthrough Energy (Owned by Bill Gates)
Airlines: Air Nippon (Japan) and Southwest Airlines (USA)
Airline Operators: Groupe ADP (operates all airports in Paris)
Airplane Manufacturers: Airbus
Bank: MUFG (Japan's largest bank)
Conglomerate: Mitsui & Co (Japan)
Funding Details and Estimates
June 2020: Mitsui, Suncor, ANA Holdings, LanzaTech ($85M) marketscreener.com/quote/stock/MI…
April 2021: Shell and British Airways (Amount undisclosed but will estimate $50M)
lanzajet.com/news-insights/…
lanzajet.com/news-insights/…
January 2022: Microsoft Climate Innovation Fund ($50M)
lanzajet.com/news-insights/…
October 2022: Bill Gates’ Breakthrough Energy ($50M)
breakthroughenergy.org/newsroom/artic…
February 2024: Southwest Airlines ($30M)
lanzajet.com/news-insights/…
April 2024: Microsoft Climate Innovation Fund (Amount undisclosed but will estimate $50M)
lanzajet.com/news-insights/…
May 2024: Groupe ADP ($20M)
lanzajet.com/news-insights/…
June 2024: MUFG, Airbus, and others ($100M)
lanzajet.com/news-insights/…
lanzajet.com/news-insights/…
This brings the total funding to date up to $435M (again a ballpark estimate).
To come up with a realistic valuation for LanzaJet based on its funding history and market trends in the sustainable aviation fuel (SAF) and clean energy sectors, we can use a multiple of the total funding raised.
Assuming a 4-8x funding-to-valuation multiple (a reasonable estimate for high-growth clean energy startups), LanzaJet is valued between $1.75B to $3.5B. For the sake of this exercise, I will be conservative and go on the lower-end of the scale at $2B-$2.5B (accounting for uncertainties and a more cautious growth trajectory).
LanzaJet has made substantial progress and opened the world's first commercial alcohol-to-jet-fuel factory in Georgia in January 2024 and has buyers secured for all the fuel produced at that facility through 2034. They are currently in process to open similar plants in the UK and Australia.
Australia:
LanzaJet has partnered with Jet Zero Australia to develop the country’s first ethanol-to-SAF production facility. This collaboration includes support from the Queensland Government, Qantas, and Airbus.
UK:
Project Speedbird is a collaborative initiative between British Airways, LanzaJet, and Nova Pangaea Technologies aimed at producing sustainable aviation fuel (SAF) from agricultural and wood waste in the UK. The project plans to construct a facility in Northeast England, with construction estimated to be completed by 2027. It's worth noting that the UK put a SAF Mandate that starts in 2025 at 2% of total UK jet fuel demand, increasing linearly to 10% in 2030 and then to 22% in 2040.
Now back to LanzaTech. $LNZA currently owns a 36% stake in LanzaJet, and is expected to increase to 46% and 53%, respectively, over the next 6 to 12 months.
lanzatech.gcs-web.com/news-releases/…
At 36% stake (current stake value range): $720M to $900M
Expected Value of 46% stake: $920M to $1.15B
Expected value at 53% stake: $1.06B to $1.33B
LanzaTech’s current market map of $270M is significantly lower than the estimated value of its 36% stake in LanzaJet, which might range from $720 million to $900 million (again conservative)
LanzaTech expected $90-105M in 2024 revenue. However, they missed their estimate in Q3 and said that Q4 will have a wide range of scenarios depending on the fruition of projects in the pipeline (already covered that area in my previous tweets). For the sake of this exercise, let's say they finish the year with $70M in total revenue.
If we apply a 3x–5x revenue multiple (very conservative for early-stage industrial tech companies), $LNZA as a standalone might be valued between $210M-$350M.
With it's leadership in carbon capture technology and being the only publicly listed pure-play, patented technology, deep integration with strategic partners (like IndianOil, ArcelorMittal, etc) and governments (Department of Energy), their intangible assets could be worth $50M on the low-end.
Valuation Components (all on the conservative end):
$LNZA valuation: $210-$350M
$LNZA intangible assets: $50M
Stake in LanzaJet at 36% $720M-$900M
Valuation: $980M-$1.3B
To remain conservative, let's discount the total estimated value of LanzaTech by 20% to account for risks such as:
- Delays in scaling projects.
- Competitive pressures in the carbon capture and recycling space.
- Variability in licensing revenue
Valuation: $784M-$1.04B
$LNZA Current Market Cap: $270M
Upside: 3-4x
All this doesn't take into account $LNZA's robust pipeline of projects for it's core business across the US, Europe, Middle East, and Asia - which if comes to fruition as my original thesis stated due to the growth and importance of carbon capture in the coming years, their valuation will increase in itself.
---
Conclusion
LanzaTech’s 36% stake in LanzaJet (valued at $720M–$900M conservatively) exceeds its entire market cap. As LanzaTech’s ownership grows to 46% or 53%, the stake could be worth $1 billion or more. The market is essentially undervaluing LanzaTech to the point of ignoring this critical asset.
Several factors might be suppressing LanzaTech’s market valuation:
- Profitability Concerns: Ongoing EBITDA losses may be a concern
- Execution Risks: Delays in scaling projects or partnerships could cause hesitation.
- Market Sentiment: Broader market conditions, particularly in high-growth or speculative sectors, could be driving down valuations.
However and in my opinion, these factors do not justify ignoring the intrinsic value of LanzaTech’s LanzaJet stake and operational potential. Time will tell...
Disclaimer: Nothing contained in this tweet should be construed as investment advice. Any reference to an investment's past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific profit. This analysis and valuation thesis incorporates multiple estimates and assumptions based on publicly available data, industry benchmarks, and historical trends. The valuation ranges and figures should be interpreted as illustrative rather than definitive and are intended to serve as a basis for discussion rather than investment advice. Always conduct your own due diligence before making investment decisions.
Grab a cup of coffee and let's do some napkin math (all estimates based on available public information and mostly being on the conservative side) that highlights a potential asymmetric opportunity due to market inefficiencies.
In June 2020, LanzaTech spun-off LanzaJet as a separate entity. Since then, LanzaJet has attracted world-class investors from various industries.
Big Tech: Microsoft (2x investor)
Big Oil: Shell (UK) and Suncor (Canada)
VC: Breakthrough Energy (Owned by Bill Gates)
Airlines: Air Nippon (Japan) and Southwest Airlines (USA)
Airline Operators: Groupe ADP (operates all airports in Paris)
Airplane Manufacturers: Airbus
Bank: MUFG (Japan's largest bank)
Conglomerate: Mitsui & Co (Japan)
Funding Details and Estimates
June 2020: Mitsui, Suncor, ANA Holdings, LanzaTech ($85M) marketscreener.com/quote/stock/MI…
April 2021: Shell and British Airways (Amount undisclosed but will estimate $50M)
lanzajet.com/news-insights/…
lanzajet.com/news-insights/…
January 2022: Microsoft Climate Innovation Fund ($50M)
lanzajet.com/news-insights/…
October 2022: Bill Gates’ Breakthrough Energy ($50M)
breakthroughenergy.org/newsroom/artic…
February 2024: Southwest Airlines ($30M)
lanzajet.com/news-insights/…
April 2024: Microsoft Climate Innovation Fund (Amount undisclosed but will estimate $50M)
lanzajet.com/news-insights/…
May 2024: Groupe ADP ($20M)
lanzajet.com/news-insights/…
June 2024: MUFG, Airbus, and others ($100M)
lanzajet.com/news-insights/…
lanzajet.com/news-insights/…
This brings the total funding to date up to $435M (again a ballpark estimate).
To come up with a realistic valuation for LanzaJet based on its funding history and market trends in the sustainable aviation fuel (SAF) and clean energy sectors, we can use a multiple of the total funding raised.
Assuming a 4-8x funding-to-valuation multiple (a reasonable estimate for high-growth clean energy startups), LanzaJet is valued between $1.75B to $3.5B. For the sake of this exercise, I will be conservative and go on the lower-end of the scale at $2B-$2.5B (accounting for uncertainties and a more cautious growth trajectory).
LanzaJet has made substantial progress and opened the world's first commercial alcohol-to-jet-fuel factory in Georgia in January 2024 and has buyers secured for all the fuel produced at that facility through 2034. They are currently in process to open similar plants in the UK and Australia.
Australia:
LanzaJet has partnered with Jet Zero Australia to develop the country’s first ethanol-to-SAF production facility. This collaboration includes support from the Queensland Government, Qantas, and Airbus.
UK:
Project Speedbird is a collaborative initiative between British Airways, LanzaJet, and Nova Pangaea Technologies aimed at producing sustainable aviation fuel (SAF) from agricultural and wood waste in the UK. The project plans to construct a facility in Northeast England, with construction estimated to be completed by 2027. It's worth noting that the UK put a SAF Mandate that starts in 2025 at 2% of total UK jet fuel demand, increasing linearly to 10% in 2030 and then to 22% in 2040.
Now back to LanzaTech. $LNZA currently owns a 36% stake in LanzaJet, and is expected to increase to 46% and 53%, respectively, over the next 6 to 12 months.
lanzatech.gcs-web.com/news-releases/…
At 36% stake (current stake value range): $720M to $900M
Expected Value of 46% stake: $920M to $1.15B
Expected value at 53% stake: $1.06B to $1.33B
LanzaTech’s current market map of $270M is significantly lower than the estimated value of its 36% stake in LanzaJet, which might range from $720 million to $900 million (again conservative)
LanzaTech expected $90-105M in 2024 revenue. However, they missed their estimate in Q3 and said that Q4 will have a wide range of scenarios depending on the fruition of projects in the pipeline (already covered that area in my previous tweets). For the sake of this exercise, let's say they finish the year with $70M in total revenue.
If we apply a 3x–5x revenue multiple (very conservative for early-stage industrial tech companies), $LNZA as a standalone might be valued between $210M-$350M.
With it's leadership in carbon capture technology and being the only publicly listed pure-play, patented technology, deep integration with strategic partners (like IndianOil, ArcelorMittal, etc) and governments (Department of Energy), their intangible assets could be worth $50M on the low-end.
Valuation Components (all on the conservative end):
$LNZA valuation: $210-$350M
$LNZA intangible assets: $50M
Stake in LanzaJet at 36% $720M-$900M
Valuation: $980M-$1.3B
To remain conservative, let's discount the total estimated value of LanzaTech by 20% to account for risks such as:
- Delays in scaling projects.
- Competitive pressures in the carbon capture and recycling space.
- Variability in licensing revenue
Valuation: $784M-$1.04B
$LNZA Current Market Cap: $270M
Upside: 3-4x
All this doesn't take into account $LNZA's robust pipeline of projects for it's core business across the US, Europe, Middle East, and Asia - which if comes to fruition as my original thesis stated due to the growth and importance of carbon capture in the coming years, their valuation will increase in itself.
---
Conclusion
LanzaTech’s 36% stake in LanzaJet (valued at $720M–$900M conservatively) exceeds its entire market cap. As LanzaTech’s ownership grows to 46% or 53%, the stake could be worth $1 billion or more. The market is essentially undervaluing LanzaTech to the point of ignoring this critical asset.
Several factors might be suppressing LanzaTech’s market valuation:
- Profitability Concerns: Ongoing EBITDA losses may be a concern
- Execution Risks: Delays in scaling projects or partnerships could cause hesitation.
- Market Sentiment: Broader market conditions, particularly in high-growth or speculative sectors, could be driving down valuations.
However and in my opinion, these factors do not justify ignoring the intrinsic value of LanzaTech’s LanzaJet stake and operational potential. Time will tell...
Disclaimer: Nothing contained in this tweet should be construed as investment advice. Any reference to an investment's past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific profit. This analysis and valuation thesis incorporates multiple estimates and assumptions based on publicly available data, industry benchmarks, and historical trends. The valuation ranges and figures should be interpreted as illustrative rather than definitive and are intended to serve as a basis for discussion rather than investment advice. Always conduct your own due diligence before making investment decisions.
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