Nano Dimension (NASDAQ:NNDM) has had a difficult run as a public company. NNDM stock has fallen from $80 in 2016 to just $6.40 now.
However, it hasn’t all been downhill. After bottoming out around a dollar per share during Covid-19, Nano Dimension has staged a comeback. Part of that is due to a general rise in interest in 3D-printing. Another factor is that prominent investor Cathie Wood and her Ark Invest firm has taken a position in NNDM stock.
So which narrative will play out? Is Nano Dimension a struggling company with a poor long-term track record? Or perhaps the company has turned the corner, and is entering a new and more prosperous era.
3D Printing Is Reaching An Inflection Point
3D printing is often viewed as a niche activity only for technological hobbyists. It’s been possible to buy 3D printers to create things such as action figures or customized art for a long time. Yet 3D printing hasn’t really gone mainstream. Some investors, understandably, have dismissed it as a fad rather than a major advance.
However, this may be changing. 3D printing is increasingly being used in vital industries such as manufacturing and health care. This is obviously a far larger and more dependable market than selling printers to amateur technophiles. In health care, fields such as dentistry are rapidly adopting digital solutions with 3D printed materials made right at the doctor’s office.
Pandemic Gives 3D Printing A Big Opportunity
The pandemic has massively disrupted existing supply chains. The world economy is built for just-in-time supply. Companies only hold just enough material on hand to meet immediate demand. This normally works, and leads to more efficiency and higher profit margins.
Now, though, this has broken down. Many factories closed for months. Ports are congested. There are major shortages of trucker drivers and other ground logistic resources. Companies in all parts of the economy are struggling to fulfill their orders on time. Prices of major goods such as homes and automobiles have been soaring.
One alternative to these problems would be to have more on-site manufacturing capacity. 3D-printing is particularly useful for manufacturing small but essential parts. Having 3D printing at a housing or aerospace factory, for example, could help produce key parts to keep the assembly lines rolling even when supply chains are not working normally.
How NNDM Stock Fits In This Thesis
Nano Dimension has its DragonFly 3D-printer for additive manufacturing. DragonFly is focused on usage cases for the semiconductor industry. Particularly, it enables the production of printed circuit boards (PCBs).
PCBs are a vital input for the electronics industry. We’ve seen the ill effects of the semiconductor shortage this year. Prices have soared for autos, and many manufacturers can’t build product at any price. The inventory simply isn’t there. 3D-printing could be a wonderful alternative to current systems and their bottlenecks.
In theory, DragonFly seems like a perfect product for the moment. Semiconductors have become a hot spot in the geopolitical tensions between the U.S. and China. There’s talk of trying to move semiconductor manufacturing back to the U.S., or at least reducing the dependence on Taiwan and other sensitive geographies.
Nano Dimension Hasn’t Proven Out Its Business
While this all sounds great on paper, it hasn’t panned out as of yet. Nano Dimension has produced $5 million, $7 million, and $3 million in revenues respectively during the past three years. That’s a rather underwhelming level of sales, and there’s no meaningful upward trend to point to, either.
It seems that, even with the supply chain issues, the higher cost of 3D printing is simply too much to make it competitive against traditional semiconductor plants as of yet.
It’s not all bad news for Nano Dimension. Given the sharp increase in the stock price lately, the company was able to issue a ton of stock. It now has more than $1 billion of cash and short-term investments on its balance sheet. This ensures that the company has plenty of runway to either expand its business organically or make acquisitions. With so much capital to work with, Nano Dimension has a shot. But so far, there’s little evidence that management can make it count.
NNDM Stock Verdict
Nano Dimension really only makes sense for risk-seeking investors. The company simply hasn’t proven out its technology nearly enough to be a safe choice. $5 million a year of revenues simply doesn’t support a large public corporation. The odds of success seem much higher in the more established industry rivals such as 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SYSS).
Those already have large customer bases and proven technology platforms. If you just want to bet on 3D printing hitting an inflection point, it’s easier to stick with the trustworthy options.
If you have a strong view on Nano Dimension’s product in particular, maybe the stock makes sense here. For investors wanting exposure to the transformational technology that is 3D printing, however, NNDM stock isn’t the best choice. Even if 3D printing takes off in fields such as health care, there’s no guarantee it will ever make a big impact in the semiconductor niche.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.