Based out of Burlington, Massachusetts, is a 3-D Printing Technology Company called Desktop Metal (NYSE: DM), which became public after a successful SPAC Business Combination with Trine Acquisition Corp. on December 15, 2020. Shares of the 2017 World Economic Forum Technology Pioneer Recipient are currently trading below the general SPAC price of $10.00 and almost 70% from its high of $31.71 in early February.
The company provides its products and services to the Automotive, Consumer Goods, Heavy Industry, Education, Machine Design, and Manufacturing Tooling industries covering the Americas, Europe- Middle East- Africa (EMEA), and Asia-Pacific (APAC). Associating 3-D Printing and the operational efficiencies with the toys and trinkets manufacturing of yesteryear would be a disservice to the nuanced and technical dexterity it offers in expediting systems and processes.
Case For 3-D Printing
To build a case for 3-D printing, consider the May 2013 report by the McKinsey Global Institute called Disruptive technologies: Advances that will transform life, business, and the global economy. According to the report, “3D printing could generate economic impact of $230 billion to $550 billion per year by 2025 in the applications we have sized. The largest source of potential impact among sized applications would be from consumer uses, followed by direct manufacturing and the use of 3D printing to create tools and molds.” Furthermore, “the combination of 3D printing of products and advanced robotics could make proximity to end markets and access to highly skilled talent more important than hourly labor rates in determining where production is located.” If the global pandemic has questioned anything, it would be the sustainability of our global supply chains where raw materials sourced in one place are manufactured elsewhere then sold someplace else. Given that the dogma was to erect production facilities in areas with cheap labor, the argument that localized 3-D printers to gain “proximity to end markets” sure does sound appealing to gross margins when you think of it.
In May 2015, Richard D’Aveni penned The 3-D Printing Revolution for the Harvard Business Review, speaking to business leaders about how the technology could add efficiencies to practices citing examples such as builders of drones- Aurora Flight Sciences, and the transformation of the U.S. Hearing Aid Industry. According to D’Aveni, “The future of additive manufacturing will bring similar surprises that might look strictly logical in hindsight but are hard to picture today.” Staying with the U.S. Hearing Aid Industry, in 2013, Rakesh Sharma for Forbes discussed the matter in detail in – The 3D Printing Revolution You Have Not Heard About. Detailed in his piece are excerpts from different industry participants documenting how the inclusion of 3-D printing has transformed the way the product is conceived, manufactured, and delivered to the customer by drastically reducing production times. A company discussed in Sharma’s piece was EnvisionTEC. Guess what? In February 2021, Desktop Metal (NYSE: DM) acquired EnvisionTEC for $300 million in cash and Desktop Metal stock. The effect of 3-D printing on the dental industry is evident if you consider the stock Align Techology Inc (NASDAQ: ALGN).
3-D printing sounds fascinating to me because it provides expedited delivery while maintaining superior flexibility and proximity to the origination of the problem site. According to the U.S. Department of Energy, Advanced Manufacturing Office, “Additive manufacturing has the potential to vastly accelerate innovation, compress supply chains, minimize materials and energy usage, and reduce waste.” Associating additive manufacturing technology such as 3-D printers with custom toys is a disservice when you consider that Boeing Co (NYSE: BA) delivers “1000 additively manufactured parts to flight programs,” and General Motors Co (NYSE: GM) announcing the opening of 15,000 square-foot Additive Infrastructure Center housing 24 3D Printers in December 2020. Examples such as Boeing Co, General Motors Co, or Case Study presented by Desktop Metal regarding Ford Motor Co (NYSE: F) argue that organizations with expansive supply chains are adapting to agile models that can deliver results along a shorter x-axis.
A Little About Desktop Metal
Desktop Metal (NYSE: DM) is headquartered in Burlington, Massachusetts, with a 3.67% weight (as of August 10, 2021) in the ARK 3-D Printing ETF (PRNT). The company registers a market capitalization of $2.37 billion, with Mr. Ric Fulop serving as the Chairman of the Board and the Chief Executive Officer.
Due to its limited time as a publicly traded entity, little information is available regarding its financials. However, for the Fiscal Year 2018, 2019, and 2020, the company generated $1.03 million, $26.44 million, and $16.48 million in Total Revenues—broken down into Products and Services segments. The percentage of total revenue from Products and Services segments for the Fiscal Year 2018, 2019, and 2020 were as follows 73:27, 86:14, and 83:17.
The company recently shared First Quarter Fiscal Year 2021 Earnings on May 17, 2021. It registered $11.31 million in Total Revenues at a Gross Loss of $587,000 compared to Total Revenues and Gross Loss of $3.39 million and $2.82 million in Q1 20. 91% of Total Revenues came from the Products segment. For the Fiscal Year 2021, the company expects to generate “over $100 million of revenue.”
Compared to a company, 3-D Systems Corporation (NYSE: DDD), that provides SLA 3D Printers to print more than 1.6 million Invisalign Clear Aligners and is the most considerable weighted stock in ARK 3-D Printing ETF (PRNT), I like Desktop Metal (NYSE: DM) for two reasons. One- its recent entry into the public markets and considerable share price depreciation from its all-time high creates an opportunity for a proper price correction. Secondly- it participates, operates, and provides products and services to industries that need to be localized, made more efficient, and flexible on deliverables. Global supply chains are great, but too much intricacy can render uncertainty at times of crisis, as displayed during the pandemic.
Printing 2-dimensional orthogonal widgets onto paper to explain ideas was apt when computers were in their infancy. Modern computing power has enabled engineers to visualize, create, code, and transform three-dimensional objects to share ideas and directly install them onto existing systems. In July 2021, Tara Wu for the Smithsonian Magazine published World’s First 3-D Printed Steel Bridge Debuts in Amsterdam. The injection of synthetic materials using additive manufacturing processes like 3-D printing to create resistant structures will become a new normal of the changing world if stasis is to be maintained to preserve the current one.
The following visual shows the price performance of Desktop Metal (NYSE: DM) against the 3-D Systems Corporation (NYSE: DDD) and ARK 3-D Printing ETF (PRNT) as of August 09, 2021. Index starts at 100.