It’s been a printing press for bearish profiteering. I’m referring to Desktop Metal (NYSE:DM). But is there a chance bullish DM stock investors can do some additive manufacturing of their own in 2022?
Let’s take a look at DM’s challenges and productive features both off and on the price chart, then offer a risk-adjusted determination aligned with those findings.
2021 was a year of stark contrasts on Wall Street.
In a market made up of stocks, large-cap barometers soared to double-digit gains and record highs. The S&P 500, Microsoft (NASDAQ:MSFT), Home Depot (NASDAQ:HD), Nvidia (NASDAQ:NVDA) and the list goes on and on.
But it was also a notorious year marked and marred by Redditors.
The bullish ape population had more than just a passing say or two in matters of hot investments, brought the term “meme stock” into our collective consciousness and saw its most of its plundering turn into nasty blundering.
GameStop (NYSE:GME). Skillz (NYSE:SKLZ). Newegg Commerce (NASDAQ:NEGG). Clover Health Investments (NASDAQ:CLOV). This list continues ad nauseum equally well and is every bit punishing as the other is pleasure filled.
DM Stock and the New Year
And among those one-time jewels turned to coal, Desktop Metal ranks among the elite.
Shares of the additive manufacturing SPAC play finished 2021 off by 71%.
If that wasn’t bad enough, from DM’s trendy and too-hot-to-not mention February peak of $34.94, Desktop Metal has shed 86% in one of the more convincing downtrends with its mostly unchallenged series of lower peaks and valleys.
2022 isn’t starting off well for DM stock’s remaining bulls either. Shares of Desktop are down about 8% out-the-gate in 2022 and hitting new lows.
Worse, the bad news is there’s also little to suggest Desktop Metal won’t continue making new meaningful lows before a more bullish narrative and price action might take hold.
Bottom line, with red ink being progressively manufactured, until ballooning costs come under control and solid revenue growth is able to become more impressive on an actual dollar basis relative to its stock valuation, DM remains a costly $1.5 billion, small-cap proposition that’s best avoided.
Monthly Price Chart
Source: Charts by TradingView
While it should be clear I’m not keen on Desktop Metals, DM stock isn’t a basket case without a way out.
The outfit does boast an impressive range of end-use applications, partners, as well as a global footprint. The pieces for success are there as InvestorPlace’s David Moadel recently discussed.
But today and more importantly, DM is an expensive stock that’s also trading in a market unwilling to bend for most growth stories.
To be sure, a bullish change in broader market sentiment could help Desktop with a speculative pop in share price.
But a future rally’s staying power, without help from a significant improvement in fundamentals, is very suspect.
DM Stock Is Off Limits
As much and if you’re looking to buy DM stock, there’s little reason to do so right now.
And that recommendation is reinforced by Desktop Metal’s monthly price chart which remains steeped in a downtrend.
Technically and if stocks are reliable forward-looking indicators of a company’s prospects, today there are no signs of better days ahead.
In closing, without a simple but critical reversal pattern in place and one backed by a visibly improved stochastics setup, I’d strongly question purchasing DM stock even with capital allocated for more speculative investments.
On the date of publication, Chris Tyler 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.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.