Deep-Learning Business Acquisition Makes Nano Dimension a Strong Buy

As I see it, there’s a major bargain in the markets right now. Shares of Israeli 3D printing firm Nano Dimension (NASDAQ:NNDM) stock are trading at a discount. And, there’s an exciting acquisition that ought to get investors excited.

NNDM stock Nano Dimension logo in an iPad, on the background their proprietary 3D printer
Source: Spyro the Dragon / Shutterstock.com

Don’t get me wrong. The share price did move higher when investors learned about the acquisition. Nonetheless, the stock is far below its peak price.

Some folks might not like Nano Dimensions’ aggressive pursuit of acquisitions. And, it is true that acquiring businesses is an expensive strategy.

I’ll leave it to you to decide whether the company’s most recent merger is worth the cost. In the final analysis, you might agree with me that the stock won’t trade at a reduced price point for much longer.

A Closer Look at NNDM Stock

It may be hard to imagine this now, but 12 months ago, NNDM stock traded for less than $1. Starting in September of 2020, however, the stock went on a wild ride.

The short sellers were badly bruised as the share price climbed relentlessly throughout the remainder of 2020. This rally culminated in a 52-week high of $17.89, reached on Feb. 9, 2021.

In hindsight, we can see how this move to the upside was probably overdone. Thus, NNDM stock retraced downwards, even falling below $7 in April.

Shares are now trading at about $8. A turnaround and a re-test of the $18 level could happen this year, though the bulls should watch for the $12 and $15 levels first.

A Growth Industry

Some of today’s market traders don’t seem to appreciate how quickly the 3D printer industry will expand in the coming year.

Market research and consulting firm DataM Intelligence expects the global 3D printed electronics market to grow at a compound annual growth rate (CAGR) of 39.5% during the forecast period of 2020 to 2027.

When listing some of the key players in the 3D printed electronics market, DataM Intelligence mentioned Nano Dimension first. That doesn’t surprise me, as Nano Dimension is an early and aggressive competitor in this niche market.

Author Eric Weiss asserts that Nano Dimension “is focused more specifically on 3D additive manufacturing (AME), which has a smaller expected CAGR of +24% for the next decade.”

That might be true, but I don’t see it as a major problem. A CAGR of 24% is still quite impressive. And if this is projected for the next decade, then Nano Dimension’s investors should look forward to multiple years of consistent returns.

Perhaps ARK Investment Management CEO Cathie Wood had the 3D printing industry’s hyper-growth potential in mind when she announced earlier this year that she was backing NNDM stock.

And the last time I checked, Nano Dimension was the 19st-largest holding of the Ark Autonomous Technology & Robotics ETF (BATS:ARKQ).

Delving into Deep Learning

Nano Dimension’s 3D printers were already smart, but due to a recent acquisition, they’re going to be even smarter.

According to a press release, Nano Dimension agreed to acquire DeepCube Ltd. That company specializes in in machine learning/deep learning (ML/DL) technology.

As per the agreement, Nano Dimension “will pay the shareholders of DeepCube approximately $40 million in cash and $30 million in American Depositary Shares (ADSs) of Nano Dimension.”

That’s a hefty price, I’ll admit. Yet, now Nano Dimension will have access to DeepCube’s patented algorithms and game-changing ML/DL technology.

Besides, Nano Dimension should be able to afford this purchase. Reportedly, the company had $671 million in cash and equivalents as of Dec. 31, 2020.

The Bottom Line

In the final analysis, the DeepCube acquisition sets Nano Dimension up as an early mover in ML/DL-enabled 3D printing technology.

This should boost NNDM stock investors’ confidence as a powerful share-price turnaround could be just around the corner.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.


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