Thank you for the no frills approach and stripping the fat and fluff from the real meat of the matter. Appreciate this follow up.... yes, we need to see the breakdowns from those acquisitions and not just that. Where are the efficiency gains from consolidating them into one under the DM entity. This was an earlier accusation that they weren't implementing too well.
You are quite welcome J. Comments like yours add value to our audience. Great point. What about seeing some synergies that reduce costs as opposed to costs increasing? "It will take time," the company will likely say. Well, we'll see.
@@Nanalyze you have to apply rationale at this point. Rick had iterated on multiple podcasts that they were not worried about high interest rates due to their strong cash position, that they weren't looking to raise cash but I was anticipating much better execution than this. Combination of those influenced my allocation. This is in part a rug pull, he had changed the stock issuance stance without warning or even indication which presumably has hurt many others (he's lost significant credibility and trust as far as I'm concerned). That was precipitous and reminds of grave market dangers.
Thank you for that added color. We weren't following them as closely as you have been. How we differ from mainstream analysts is that we never speak to company management, nor have any interest in what they have to say, aside from formal guidance and earnings call transcripts. The ground truth is what they tell the SEC. Your added color is much appreciated.
One more thing to add. When we see C-level types on podcasts with small amounts of traffic it doesn't show a very good use of their time. There are far more important things for a CEO to be doing. It's like the CEO of NNDM floating around on Reddit (we doubt it's even him, but the company hasn't taken steps to address it, so who knows). The CEO of DM should be doing appearances on major media channels only, not fluttering around on small podcasts.
Great video. I hope you continue covering the company. Here's my more bullish take: Seasonality has been the nature of the business. DM’s past couple years are clouded by acquisitions, but looking at ExOne’s 2018 and 2019 earnings (cleaner pre-covid numbers), 30-40% of revenue came from Q4. DM’s estimate of 15% in Q1 and low 20’s in Q2 and Q3 leaves 40% of revenue coming in Q4 to meet $260M+ guidance for the year. Yes, quarterly gross margins are down. To me it's not out of the question this is driven by a combination of seasonality and product launches. DM has introduced or adjusted production on half a dozen products. One-time costs and immature margins added to the perfect storm for the quarter. Adjusting for intangibles amortization from acquisitions, gross margin remains positive. And GM are guided to materially expand this year. Prior to this quarter DM had six consecutive quarters of gross margins expansion as those products matured, up to ~30%. Operating expenses are only down 15%, and convertible notes are alarming. The offering seems to be insurance through the global economic uncertainty. To survive the company will need to grow their installed base to realize high margin recurring revenue from consumables. If DM was just barely on track, then the macro conditions turned against them, I can reconcile the decision to dilute/take debt for more runway.
Thank you for the feedback. We'll continue to cover them, just at a lower frequency going forward. Now we better understand their comment about revenue cadence. Hadn't thought it was referring to ExOne. Good call. But also ExOne couldn't grow revenues so that's another issue. Noted on the costs being higher as they launch new products. Makes sense. Everything you said is thoughtful and useful to our readers. Thank you very much for taking the time to add value to the conversation Jason. Investors with more tolerance for risk than we have could see this as an opportune time to start going long.
Thank you I was thinking about this company all morning and then I saw your video pop up on my phone I have a significant position in this company Much appreciated
I like Desktop metal, for 3 reasons primarily. 1st, total decoupling from China, we are onshoring a lot of our supply chain and the pandemic has shown that the entire world being over reliant on a single source for just in time supply was the epitome of stupid. The US was once a manufacturing power house and I think were headed that direction again through 3 printing, automation, and robotics. #2 DM is the largest 3d printing company that exist and has consolidated many of the moving parts in the space so should benefit greatly from that emerging TAM. #3 The have enough cash on balance books to give them a few years of runway to figure their shit out and survive the transition. This doesn't guarantee execution but at current valuations and developing macro trends in the global supply networks the Risk vs Reward is pretty good. + the tech is just really cool even if it has not quite found market fit yet. (FYI, I do not have a position but am considering selling puts to average into a small position)
This a great response, thank you for taking the time to share your thoughts. Point one implies that DM will benefit from government spending or benefits that focus on American manufacturing. That's a tailwind but only if you can sell products while making a profit and without subsidies or it becomes a temporary benefit. Point two, absolutely agree. Point three, based on current spending they don't have a few year runway - more like 3/4 of a year. They need to get that spending under control. For risk hungry investors it's a decent punt at these prices. Selling puts to get into a position makes sense, bearing in mind this thing is likely to continue being volatile. It always has been.
Thanks for this video. Still thinking to buy a bit more to DCA but not as much anymore after seeing this video. And agreed about the ceo, did not understand myself why he was in small youtubers and small podcast clips as well, looks a bit desperate
You're quite welcome. A CEO should be guided by an astute investor relations team that knows the return on investment for any appearance. This usually means either the emperor has no clothes and does what he wants, or the IR team sucks. In either case, the CEO should soon realize what a waste of time it is to appear on podcasts unless they're brands like Lex Fridman (best podcast out there) or Joe Rogan (second best podcast out there).
Technically, a bag holder is defined as someone who holds shares that become worthless. DM shares are hardly worthless, they've just become a lot more risky from where we're sitting. And it's great to hear you're learning. That's the most important thing.
@@Nanalyze well I'll admit that I'm guilty of breaking the emotional investing rule but at least the money I invested was not borrowed or necessarily needed. So, not a bag holder... yet lol
Thanks for this update. I have just a few shares of DM and could easily lower my cost basis here but I was looking for this type of commentary. This quarterly sounds like other 3D printers who end up dead. Hopefully I am wrong but we shall see. Reverse split seems required soon to prevent delisting?
For delisting, the rules differ by exchange. From Investopedia: on the New York Stock Exchange (NYSE), if a security's price closed below $1.00 for 30 consecutive trading days, that exchange would initiate the delisting process.
Hey George. Nice to see the gross margin expansion and revenue growth. We usually check in with companies about once a year which seems to be the right cadence. Large price movements and M&A events also could result in an updated piece as well.
That's not a bad idea but we're just short resources to do that for now. Note the 6% interest rate and conversion at a very low share price. Back of the napkin math - 58 million possible shares converted at the ultra low price of $1.66 a share dilutes by about 18%.
Good morning. I hold a very large position in Desktop. Great video by you! Do you have any thoughts on: 1. What FreeFoam can do for this company? 2. "If" Desktop has a solid earnings report this August, what could it mean for the share price? 3. How will Lumafield help Desktop Metal?
Hey Jeffrey, We don't do a lot of analysis on "what-ifs." Our concerns presented in this video are showstoppers, and we'll need to see them addressed otherwise there's little point in speculating as to what could happen. This is a popular stock so we'll revisit it when major events happen. Really appreciate your feedback. As you can imagine, a lot of research goes into these pieces and we're running quite lean so we'll generally answer ad-hoc questions for paying subscribers only ;)
@@Nanalyze Totally understand. This is my very 1st visit to your page. At some point I would consider "paying". With that said, I liked what u said and will keep watching!
SPACs burned a lot of people. We're underwater with other stocks at a similar loss and it's a great lesson in humility and helps one learn how to manage through paper losses.
@@Nanalyze Yep, bought Peter Thiel's Bridgetown Holding(1) too, last time at 14$(yes, I know). Would you sell it at current 10$? ( I bet you would hehe)
@@Nanalyze The question is also, why did the Bridgetown 2 stock go down post merging. Potential growth is way higher in that area and business models looks solid. I will sell my Bridgetown 1 stocks tomorrow and cut the losses, partly due to your directional advice
@@jwine1957 We don't give advice. Trade on your own convictions. We don't know squat about these companies you're talking about as we've never covered them.
@@Nanalyze thanks. I’m a total novice and I don’t know anything about stocks or investing. However, I love everything CNC machining an 3d printing. About a month ago I was considering investing in DM but then I came across this video. Kicking myself a little now, but I look forward to your update video. Cheers
@@grandmastersreaction1267 Thank you for clarifying! You came to the right place as we love pointing novices in the right direction by telling them about all the mistakes we've made :) Here's a good place to start: th-cam.com/video/hvcYY4MIAjg/w-d-xo.html
Thank you very much for that George. We just realized the little icons nest to people's names show how long they've been subscribed, so thank you for being a loyal viewer and taking the time to give feedback :)
That very well may be the case. Below is a video we did on Invitae covering the topic. We're also revisiting the gene editing theme, research that should be out shortly. th-cam.com/video/gZX603RYqcM/w-d-xo.html
Editas won the Crisper patent judgement. That means they will get royalties from the many other Cas 9 patents. I think Editas is the greatest value of the genomic stocks at the current moment. The human trial of curing pediatric blindness has already occurred. The first trial baby should be born mid year 2022. If the baby has healthy vision as the same results of the animal trials, stock will rocket up. Granted, macro market may delay positive response.
This one is tricky. Each individual company will license from EDIT as needed. Look at Beam, for example: th-cam.com/video/LCuMbPozgJo/w-d-xo.html The pharma partner backing out (AbbVie) is a concern. Remains to be seen what Editas can capture through royalties as the whole IP situation is still quite foggy.
Thank you for the no frills approach and stripping the fat and fluff from the real meat of the matter.
Appreciate this follow up.... yes, we need to see the breakdowns from those acquisitions and not just that. Where are the efficiency gains from consolidating them into one under the DM entity. This was an earlier accusation that they weren't implementing too well.
You are quite welcome J. Comments like yours add value to our audience. Great point. What about seeing some synergies that reduce costs as opposed to costs increasing? "It will take time," the company will likely say. Well, we'll see.
@@Nanalyze you have to apply rationale at this point. Rick had iterated on multiple podcasts that they were not worried about high interest rates due to their strong cash position, that they weren't looking to raise cash but I was anticipating much better execution than this. Combination of those influenced my allocation.
This is in part a rug pull, he had changed the stock issuance stance without warning or even indication which presumably has hurt many others (he's lost significant credibility and trust as far as I'm concerned).
That was precipitous and reminds of grave market dangers.
Thank you for that added color. We weren't following them as closely as you have been. How we differ from mainstream analysts is that we never speak to company management, nor have any interest in what they have to say, aside from formal guidance and earnings call transcripts. The ground truth is what they tell the SEC. Your added color is much appreciated.
One more thing to add. When we see C-level types on podcasts with small amounts of traffic it doesn't show a very good use of their time. There are far more important things for a CEO to be doing. It's like the CEO of NNDM floating around on Reddit (we doubt it's even him, but the company hasn't taken steps to address it, so who knows). The CEO of DM should be doing appearances on major media channels only, not fluttering around on small podcasts.
Great video. I hope you continue covering the company. Here's my more bullish take:
Seasonality has been the nature of the business. DM’s past couple years are clouded by acquisitions, but looking at ExOne’s 2018 and 2019 earnings (cleaner pre-covid numbers), 30-40% of revenue came from Q4. DM’s estimate of 15% in Q1 and low 20’s in Q2 and Q3 leaves 40% of revenue coming in Q4 to meet $260M+ guidance for the year.
Yes, quarterly gross margins are down. To me it's not out of the question this is driven by a combination of seasonality and product launches. DM has introduced or adjusted production on half a dozen products. One-time costs and immature margins added to the perfect storm for the quarter.
Adjusting for intangibles amortization from acquisitions, gross margin remains positive. And GM are guided to materially expand this year. Prior to this quarter DM had six consecutive quarters of gross margins expansion as those products matured, up to ~30%.
Operating expenses are only down 15%, and convertible notes are alarming. The offering seems to be insurance through the global economic uncertainty. To survive the company will need to grow their installed base to realize high margin recurring revenue from consumables. If DM was just barely on track, then the macro conditions turned against them, I can reconcile the decision to dilute/take debt for more runway.
Thank you for the feedback. We'll continue to cover them, just at a lower frequency going forward.
Now we better understand their comment about revenue cadence. Hadn't thought it was referring to ExOne. Good call. But also ExOne couldn't grow revenues so that's another issue.
Noted on the costs being higher as they launch new products. Makes sense.
Everything you said is thoughtful and useful to our readers. Thank you very much for taking the time to add value to the conversation Jason. Investors with more tolerance for risk than we have could see this as an opportune time to start going long.
Thank you
I was thinking about this company all morning and then I saw your video pop up on my phone
I have a significant position in this company
Much appreciated
Great to hear! Generally, we don't check in with stocks more than once a year, but DM is a popular one so we decided to do a piece on this major drop.
I like Desktop metal, for 3 reasons primarily. 1st, total decoupling from China, we are onshoring a lot of our supply chain and the pandemic has shown that the entire world being over reliant on a single source for just in time supply was the epitome of stupid. The US was once a manufacturing power house and I think were headed that direction again through 3 printing, automation, and robotics. #2 DM is the largest 3d printing company that exist and has consolidated many of the moving parts in the space so should benefit greatly from that emerging TAM. #3 The have enough cash on balance books to give them a few years of runway to figure their shit out and survive the transition. This doesn't guarantee execution but at current valuations and developing macro trends in the global supply networks the Risk vs Reward is pretty good. + the tech is just really cool even if it has not quite found market fit yet. (FYI, I do not have a position but am considering selling puts to average into a small position)
This a great response, thank you for taking the time to share your thoughts. Point one implies that DM will benefit from government spending or benefits that focus on American manufacturing. That's a tailwind but only if you can sell products while making a profit and without subsidies or it becomes a temporary benefit. Point two, absolutely agree. Point three, based on current spending they don't have a few year runway - more like 3/4 of a year. They need to get that spending under control. For risk hungry investors it's a decent punt at these prices. Selling puts to get into a position makes sense, bearing in mind this thing is likely to continue being volatile. It always has been.
Thanks, both of you, for addressing this drop and what might be going on with this troubled but extremely interesting company...
Thanks for this video. Still thinking to buy a bit more to DCA but not as much anymore after seeing this video. And agreed about the ceo, did not understand myself why he was in small youtubers and small podcast clips as well, looks a bit desperate
You're quite welcome. A CEO should be guided by an astute investor relations team that knows the return on investment for any appearance. This usually means either the emperor has no clothes and does what he wants, or the IR team sucks. In either case, the CEO should soon realize what a waste of time it is to appear on podcasts unless they're brands like Lex Fridman (best podcast out there) or Joe Rogan (second best podcast out there).
Your Awesome 😎 👍 Always waiting for a new video!
These are the sort of props that make all the blood, sweat, tears, and bong water stains worth it.
Picked up 5000 shares at 1.40
A man with some cojones. None of that DCA nonsense, pick a price point and punt.
same bro
Helpful. It'd also be useful to know the share cost basis of the company's main promoters, is it below a few cents? Is there a way to find that out?
We're not picking up what you're putting down here.
Something I needed to hear. Bag holder but I learned to be a better investor..
Technically, a bag holder is defined as someone who holds shares that become worthless. DM shares are hardly worthless, they've just become a lot more risky from where we're sitting. And it's great to hear you're learning. That's the most important thing.
@@Nanalyze well I'll admit that I'm guilty of breaking the emotional investing rule but at least the money I invested was not borrowed or necessarily needed. So, not a bag holder... yet lol
@Andrew F - a man with money he doesn't need. Goalz. ;) Good job on not using margin. That's never a good idea.
i am only interested in what the product can do, thanks for video
You're most welcome
Great video.. i am unfortunately a bag holder.. im either holding it til 0 or cashing in om profits... eventually..
You're only a bag holder if it goes to zero. Perhaps the biggest thing they need to do is start selling that P-50 and increasing gross margins.
Thanks for this update. I have just a few shares of DM and could easily lower my cost basis here but I was looking for this type of commentary. This quarterly sounds like other 3D printers who end up dead. Hopefully I am wrong but we shall see. Reverse split seems required soon to prevent delisting?
For delisting, the rules differ by exchange. From Investopedia: on the New York Stock Exchange (NYSE), if a security's price closed below $1.00 for 30 consecutive trading days, that exchange would initiate the delisting process.
Glad you’re covering this - was hoping you would.
Cheers for that Zach. This is a stock in the Nanalyze Disruptive Tech Stock Report so it would be covered for that reason.
Great video I’m just getting back into investing and this video gave a lot of good insight on the stock sounds like not to good of a buy right now
Glad you enjoyed the video. Every investor needs to act based on their own convictions.
Desktop Metal just had decent earnings. Can you do an updated video?
Hey George. Nice to see the gross margin expansion and revenue growth. We usually check in with companies about once a year which seems to be the right cadence. Large price movements and M&A events also could result in an updated piece as well.
With the pricing of the offering now available... will you add some popups to the video with comments?
That's not a bad idea but we're just short resources to do that for now. Note the 6% interest rate and conversion at a very low share price. Back of the napkin math - 58 million possible shares converted at the ultra low price of $1.66 a share dilutes by about 18%.
Joe, good video! I do own this stock, and I wonder seeing how it will progress in the next 5 years.
We covered this firm heavily before they went public and had high hopes. We'll check back in again to see how they're faring perhaps early next year.
Great, Joe! I am still buying it on the deep with limit orders to reach my target of owning 1k shares.
Good morning. I hold a very large position in Desktop. Great video by you! Do you have any thoughts on:
1. What FreeFoam can do for this company?
2. "If" Desktop has a solid earnings report this August, what could it mean for the share price?
3. How will Lumafield help Desktop Metal?
Hey Jeffrey,
We don't do a lot of analysis on "what-ifs." Our concerns presented in this video are showstoppers, and we'll need to see them addressed otherwise there's little point in speculating as to what could happen. This is a popular stock so we'll revisit it when major events happen. Really appreciate your feedback. As you can imagine, a lot of research goes into these pieces and we're running quite lean so we'll generally answer ad-hoc questions for paying subscribers only ;)
@@Nanalyze
Totally understand. This is my very 1st visit to your page. At some point I would consider "paying". With that said, I liked what u said and will keep watching!
@@patten1962 Sounds great! Always love to hear from people whether they're subscribers or just readers.
@@joepiv
Thank you Joe. Look forward to what you guys have to say after the next Earnings. Hopefully I will still want to watch! 🤔😏😁
Nice analysis, burned myself with DM but still holding.(bought at average of 12dollar)
SPACs burned a lot of people. We're underwater with other stocks at a similar loss and it's a great lesson in humility and helps one learn how to manage through paper losses.
@@Nanalyze Yep, bought Peter Thiel's Bridgetown Holding(1) too, last time at 14$(yes, I know). Would you sell it at current 10$? ( I bet you would hehe)
Hopefully they can find a company to merge with. SPAC action has slowed way down this year.
@@Nanalyze The question is also, why did the Bridgetown 2 stock go down post merging. Potential growth is way higher in that area and business models looks solid. I will sell my Bridgetown 1 stocks tomorrow and cut the losses, partly due to your directional advice
@@jwine1957 We don't give advice. Trade on your own convictions. We don't know squat about these companies you're talking about as we've never covered them.
Why is the stock doing so well now?
No idea because we invest in companies, not stocks. At some point we'll be doing an update on the company.
@@Nanalyze thanks. I’m a total novice and I don’t know anything about stocks or investing. However, I love everything CNC machining an 3d printing. About a month ago I was considering investing in DM but then I came across this video. Kicking myself a little now, but I look forward to your update video. Cheers
@@grandmastersreaction1267 Thank you for clarifying! You came to the right place as we love pointing novices in the right direction by telling them about all the mistakes we've made :) Here's a good place to start: th-cam.com/video/hvcYY4MIAjg/w-d-xo.html
@@Nanalyze thanks for sharing!
Excellent Video.
Thank you very much for that George. We just realized the little icons nest to people's names show how long they've been subscribed, so thank you for being a loyal viewer and taking the time to give feedback :)
Editas and Invitae are on the endangered species list.
That very well may be the case. Below is a video we did on Invitae covering the topic. We're also revisiting the gene editing theme, research that should be out shortly.
th-cam.com/video/gZX603RYqcM/w-d-xo.html
Editas won the Crisper patent judgement. That means they will get royalties from the many other Cas 9 patents. I think Editas is the greatest value of the genomic stocks at the current moment. The human trial of curing pediatric blindness has already occurred. The first trial baby should be born mid year 2022. If the baby has healthy vision as the same results of the animal trials, stock will rocket up. Granted, macro market may delay positive response.
This one is tricky. Each individual company will license from EDIT as needed. Look at Beam, for example: th-cam.com/video/LCuMbPozgJo/w-d-xo.html
The pharma partner backing out (AbbVie) is a concern. Remains to be seen what Editas can capture through royalties as the whole IP situation is still quite foggy.
I don't know why it's so hard to give quotes on their products lol
Would love to see some customers talk about the success they're having with the long-awaited P-50 production platform.
@@Nanalyze do you know how much the debinder and furnace is?
We haven't the foggiest. One of the lads who covers that says he seems to recall some number like $250K for the P-50.
Hold a bag of 750 shares at 10$, I'm in until I have grey hair !
It's ain't over until the big beautiful woman with half a dozen weight-related health issues sings.