Additive manufacturing 3D printing solutions company
Desktop Metal NYSE: DM stock has recovered back through its reverse merger highs of $24.80 hit on Dec. 10, 2020. The Company reversed merged into special purpose acquisition company (SPAC) Trine Acquisitions to trade under the new symbol DM on Dec. 10, 2020. Shares promptly sold off to $15.54 lows before bottoming out and recovering. Desktop metal utilizes binder jetting which is 100 times faster than traditional laser based printing. Arguably the fastest 3D printer on the market designed for mass production, it allows companies to produce on the fly parts at a fraction of the time and cost versus using legacy manufacturing methods. As an enabling technology,
3D printing is gaining traction with the
automotive industry and
electric vehicle makers. In fact, the industrial uses of additive manufacturing is unlimited, and the Company is expected to rollout its next-gen printers in 2H 2021 en masse.
Financial Projections
Desktop Metal is emerging from concept stage as the newly minted Company has yet to release its full-year 2020 earnings report. In the S-1 filing on Jan. 15, 2021, the Company reported a sharp drop in revenues to $8.1 million for the nine months ended Sept. 30, 2020 from $20.8 million in the previous year’s nine month period. Losses were (-$65.76 million) compared to (-$80.482 million) in prior year period. While this certainly takes some steam out of the narrative. However, the Company projects revenues to reach $78 million in 2021 as it rolls out its commercial printers at $2.4 million a pop with $500,000 in annual servicing revenues for up to the 10-year life cycle of the product. Desktop Metal claims to have over 90 printer system reservations which would amount to over half a billion in revenues based on just the printer sales and servicing, without the add-on services. The Company projects a 78% compound annual growth rate (CAGR) from 2021 to 2025, estimate its top line will grow to $942 million by 2025.
Resurgence of 3D Printing
The renewed interest in the 3D printing stocks can credited for the surprise guidance raise by 3D Systems NYSE: DDD on Jan. 5, 2021. The Company upped it Q4 guidance to the $170 million to $176 million range from the $139.90 original guide. This caused shares to more than double the next day from $11.24 to $25.33 highs and nearly triple in the following weeks grinding up to $35.36. The momentum spread throughout the sector pulling up shares of Stratasys NASDAQ: SSYS, ExOne NASDAQ: XONE and Desktop Metal. Since the industrial and aerospace applications of 3D printing continue to grow, the momentum has continue to grind with speculation of inclusion into more theme-based exchange traded funds (ETFs) as an “enabling technology”. The latest surge stems from the rumored inclusion in the highly anticipated ARK Space Exploration ETF run by iconic manager Cathie Wood.
EnvisionTEC Acquisition
On Jan. 15, 2021, Desktop Metal announced the acquisition of EnvisionTEC for $300 million in stock and cash, expected to closed by end of Q1 2021. EnvisionTEC is a leader in DLP 3D printing company specializing in real end-use parts manufacturing servicing medical, industrial, and professional industries. The Xtreme 8K DLP usual dual 4K projector DLP technology to print highly accurate parts, able to run 24/7 and claims to be the largest build envelope 3D printer in the world. The Company gains digital casting capabilities through EnvisionTEC’s robotic additive manufacturing (RAM) platform. The Company has installed over 5,000 printers in 66 countries. EnvisionTEC will continue to operate as a subsidiary of Desktop Metal. Desktop Metal will continue to pursue more complementary acquisitions moving forward. There is dilution risk that can come with this strategy. The narrative is blossoming which has drastically improved sentiment, the stock price follows. Risk-tolerant investors seeking to gain exposure should monitor opportunistic pullback levels.
DM Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provide a broader view of the price action playing field for F stock. The weekly rifle chart spiked to peak at the $24.78 Fibonacci (fib) level with a potential doji candle. The weekly stochastic crossed back up towards the 80-band as the weekly 5-period moving average (MA) continues to catch up at the $21.21 fib. The daily rifle chart formed a market structure low (MSL) buy triggered above $17.99. The daily stochastic formed a mini pup to blast through the 80-band powering shares above the daily 5-period MA at $24.39. The daily stochastic is stalling just above the 80-band setting up a mini pup thrust towards the daily upper BBs at $28.09 or a cross down through the 80-band to form a daily channel tightening back towards the 15-period MA for opportunistic pullback levels at the $22.63 fib, $21.21 fib, $19.64 fib, $18.07 fib and the $16.54 fib. The upside trajectories range from the $27.56 level up towards the $35.49 fib. Keep an eye on peer stocks DDD, SSYS and XONE as they tend to lead the action.
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