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Nano Dimension Stock Is a Good Long-Term Buy Here, But Patience Is Key

It’s been about seven weeks since I last wrote about Nano Dimension (NASDAQ:NNDM) stock.

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

The Israeli 3D printer manufacturer has the attention of Ark Invest CEO Cathie Wood.

Wood’s Ark Autonomous Technology and Robotics ETF (NYSEARCA:ARKQ) has upped its position in NNDM stock to a little over eight million shares.  

As a result of the portfolio manager’s interest in DragonFly LDM (Lights-out Digital Manufacturing) technology, I recommended speculative investors consider its stock below $7.

“If it were me, I’d buy ARKQ to capture Nano Dimension’s potential while reducing the company-specific risk.],” I wrote on July 19. “Unfortunately, Nano Dimension still needs to prove it can generate meaningful sales. We won’t know the answer until well into 2022.” 

“Wood’s fund owns 46 stocks in ARKQ. Many of them are large businesses with significant profits to protect against the money losers like NNDM.”

Although seven weeks have passed, my thoughts on its stock haven’t changed. I still think Wood’s right to hold NNDM stock.

If you read and reread CEO Yoav Stern’s message to shareholders, I think you’ll come away thinking it’s got a shot at greatness. 

Here’s why. 

NNDM Stock and Meaningless Numbers

I always like hearing or reading about CEOs getting real. Yoav Stern does that in his Q2 2021 message to shareholders.

“[T]he fact that our revenue and gross margin (net of amortization of intangibles) for the first half of 2021 were up by 68% and 40% compared to similar periods in 2020, is not necessarily a comprehensive indication of the status of our business,” Stern stated. “The results, positive as they may be perceived, are still too small in absolute magnitude to derive any meaningful conclusions.”

Translation: We are not some massive corporation like General Electric (NYSE:GE), where numbers tell the whole story. It’s the intangibles such as Deep Cube, the company’s patented deep machine learning engine, that will help Nano Dimension’s business turn the corner on its pathway to profitability. 

“This ‘Robotic Brain’ is in the process of being made to run a digital network of 3D-fabrication printers which will convert material inventory into digital-cloud-based-inventory, until printed as a final 3D product – where needed, when needed and only then,” Stern says. 

He then says that DragonFly and Fabrica 2.0 will enable companies currently considered environmental pigs to change their stripes while simultaneously solving their supply chain issues.

That’s a tall order but truly exciting in its scope and possibilities. How can you not get excited by this vision?

My wife and business partner are building a house right now. It would be so cool to produce some of the smaller parts required for the build on-site without wrangling with supply chain issues. 

I’m not technically advanced to the point where I can say unequivocally that Nano Dimension’s technology is the bomb, as young kids like to say, but it certainly appears to have great potential. 

It’s Got Plenty of Cash

The CEO points out that the $1.4 billion cash on its balance sheet will give it five to six years to iron out the wrinkles in its products. 

“Nano Dimension leadership can think, plan and efficiently execute long-term business plans, for the benefit of our shareholders and customers. We do so by evading the trap of wasting expensive energy and especially time for reaching short-term financial goals,” Stern says. 

“We do not undermine the ability of our scientists, engineers, and business leaders to fulfill our stakeholders’ long term investment goal: Creating unparalleled added value which will drive financial value to an order of magnitude above the company and its competitors’ present valuation, even if it takes a bit longer than a few quarters.”

He’s basically telling potential investors NOT to buy NNDM stock if they are impatient and looking for results now. That pretty much excludes most Reddit and Robinhood followers.  

In a way, Stern’s thinking, and that of the company, reminds me of the Danaher Business System, or DBS, which borrowed Japanese KAIZEN methodologies starting in 1988, turning Danaher (NYSE:DHR) into a lean, mean, fighting machine. 

The Bigger Picture

Some might wonder why a company that thinks bigger-picture would bother to go public. Surely, if Nano Dimension’s technology is so great, capital would be overflowing from private investors. 

The truth is, Nano Dimension is nine years old, has traded on the Tel Aviv Exchange since it carried out a reverse merger in August 2014, and listed its American Depositary Shares (ADSs) in March 2016

While it does have a big-picture mentality, being a public company helps remind it that it has a series of inflection points that must be reached for its technology to truly gain traction. 

Being public helps keep it hungry. 

“[It hopes to] create a business-disruptive set of inflection points. While, as usual, there is no guaranty for the timing thereof, these inflection points will hopefully cause an increase of value by step functions and create exceptional time-weighted return on investment for all of us, the long-term investors,” Stern concludes. 

If you’re a speculative investor, whether you take a position in Nano Dimension through ARKQ or NNDM stock itself, the point is, professional investors such as Cathie Wood see its potential.

That’s a major positive.

Now it just has to keep executing its plan. However long it takes, Stern would likely argue, is immaterial.

On the date of publication, Will Ashworth 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.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2021/09/nndm-stock-is-a-good-long-term-buy-here-but-patience-is-key/.

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