Nano Dimension (NASDAQ:NNDM) was one of the beneficiaries of the 2020 bull run. I remember last year when NNDM stock was very popular among retail investors. The stock shot up nearly 10x from below $2 in September last year to a high of approximately $18.
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This massive run-up was despite the dilution caused by management continuously issuing new shares.
The market eventually corrected punishing growth stocks. NNDM’s stock price fell more than 66% from its all-time highs. The stock has seemed to find a support base at the $5.50 level with resistance at the $9.30 level. NNDM stock is still trading below its 200-day moving average, indicating that it may consolidate or continue to trend down from these levels.
Beaten down growth stocks provide an interesting opportunity for long-term-oriented investors. While NNDM stock has had a rough 2021 so far, the company itself remains quite promising. I believe Nano Dimension could be a worthwhile investment at these prices.
3D Printing Can Usher in a Revolution in Manufacturing
Nano Dimension is an Israeli-based technology company focused on 3D printing for the electronics industry. The company’s proprietary DragonFly system is designed to fabricate electronic circuitry such as printed circuit boards (“PCBs”), antennas, capacitors and sensors. These circuit boards are used in a wide variety of industries such as consumer electronics, medical devices, telecommunications and many more.
Using 3D printing has the potential to completely change the manufacturing industry. This technology brings an unprecedented level of agility to the world of hardware. For example, engineers and designers will be able to build and test functional circuit prototypes within a matter of hours.
Typically, prototype designs are sent to third-party manufacturing facilities which then create the models. This process can take weeks. Errors can lead to costly mistakes due to this time lag and the large minimum orders required. The fear of creating costly errors also limits the creativity of engineers and designers to push design boundaries.
Nano Dimension’s DragonFly system can be at the forefront of the 3D printing revolution. This industry has the potential to be extremely lucrative in the future. In its 2021 big ideas report, Ark Invest describes 3D as still in its infancy. The market potential for 3D printing prototypes is about $12 billion. Ark Invest believes 3D printing has the potential to grow to a $120 billion industry by 2025, a compound annual growth rate of 60%.
Nano Dimension’s Had Mediocre Q2 Results
Nano Dimension recently announced its Q2 results and there is quite a bit to unpack. The company had Q2 and year-to-date revenues of $811,000 and $1.6 million, respectively. This represents a 181% and 63% increase from a year ago. However, the numbers are too small to draw any meaningful comparison.
Moreover, the company has still not recovered its revenues to pre-pandemic levels. Remember, in Q4 2019 the company posted revenues of close of $2.0 million. Full-year 2019 revenue was $7 million.
Nano Dimension is still clearly a start-up company in the process of designing its product and business model. The company had an operating loss in the quarter of $19.8 million. Given the company’s cash position of approximately $1.4 billion, I calculated Nano Dimensions has a cash runway of about 70 quarters or about 17 years. Plenty of cash runway to execute its plans.
In the Q2 results Nano Dimension CEO Yoav Stern published a letter addressing traders and short-term oriented investors. He discussed that revenue growth and expense reduction are not the main focus of the company yet. Focusing on these factors is inappropriate given the stage of the business.
Rather the emphasis is on product development and meaningful investments in R&D, material research, and data science expense. This was a refreshing take from the CEO and describes the ideal mindset of investors in NNDM stock.
This stock is volatile and high-risk however it has a lot of promise. Investors should consider NNDM stock.
On the date of publication, Joseph Nograles 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.
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