I was around a decade ago for the first 3D printing revolution. But now the industry is back under the name additive manufacturing. This focuses on industrial applications, and one of its new players is Nano Dimension (NASDAQ:NNDM). Nano Dimension stock was hot early in this year, but it is now cold. So, should you be buying NNDM stock?
The first run by 3D printing was failure. Efforts to make this a consumer business through MakerBot left the whole industry in a bad odor. Industry leaders like 3D Systems (NYSE:DDD), which had followed the trend, barely survived.
Nano Dimension is an Israeli company. It is best known for its Dragonfly LDM system, which prints circuit boards that were previously assembled.
In 2020 NNDM lost $48 million, $1.13 per share, on revenues of $3.4 billion. The stock is priced at about $8.30, with a market cap of $2.07 billion.
NNDM stock has done a round trip since the first of the year and is now priced slightly below where it started January.
The gains came after Ark Funds CEO Cathie Wood, Wall Street’s hot hand in technology investment, said she was backing the stock. Two ARK funds now hold positions in NNDM. Together the stakes represent about 5% of the company’s equity.
Wood is especially pleased with NNDM’s defense contracts. “We always look for where defense is putting their money,” she says. This makes sense because many technology breakthroughs, including the internet, began as Cold War activities.
ARK has some InvestorPlace writers excited as well. Our Chris Tyler has compared the opportunity to Apple (NASDAQ:AAPL) or Tesla (NASDAQ:TSLA). David Moadel likes the company’s investor presentation, arguing that 3D printed electronics will be a $2.3 billion business by 2029.
Bet the Jockey?
If you’re thinking at an investment in NNDM today, you’re betting on the jockey as well as the horse.
Stern has been talking up the company’s prospects, saying revenue in the second half of the year was higher than he expected. Absent Covid-19 it would have even been better, he wrote, but some customers signed service contracts instead of buying systems. The company’s business model is based on not just selling Dragonfly LDM systems, but the nano-ink the device uses.
Stern has also been building a financial war chest, selling new stock and talking up an acquisition strategy.
The company has done eight equity raises in six months. That’s a danger signal to our Mark Hake. NNDM recently had $1.45 billion in cash, he estimates, meaning the operating company was valued at just $700 million.
So far, however, Stern has been frustrated in his search for a partner. He blames special purpose acquisition companies (SPACs), which are also looking at private companies, aiming to take them public. The cash has practically made NNDM a SPAC itself, Hake writes, because it’s now valued based mainly on its cash and prospects of making a deal.
The Bottom Line
While some analysts have lost patience with Stern, he and NNDM stock are still a reasonable speculation.
Stern is looking to make a deal, and that could be the sale of the company as well as a purchase. The company’s cash would be attractive to a company like 3D Systems, while its technology could be of interest to a defense contractor.
I understand the risks. I’ve seen this sector fall before. But Stern won’t wait forever to make a deal. When he does, I suspect the stock will pop.
At the time of publication, Dana Blankenhorn directly owned shares in AAPL. He did not (either directly or indirectly) hold any other positions in the securities mentioned in this article.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at firstname.lastname@example.org, tweet him at @danablankenhorn, or subscribe to his Substack https://danafblankenhorn.substack.com/.