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Investing in Desktop Metal (NYSE: DM) Stocks

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Investing in Desktop Metal (NYSE: DM) Stocks

Desktop Metal(NYSE: DM) is a Massachusetts based producer of end-to-end 3D printing solutions. The company has invested substantially into products to meet the needs of large scale manufacturers. With a customer list that includes companies like Volkswagen, Toyota, and General Motors, the company has positioned itself as the go-to partner for large firms looking to replace traditional manufacturing methods with new-age 3D-printing. With the 3D-printing market expected to grow ten-fold to $146 billion over the next decade, Desktop Metal has created low-cost, efficient, and easy to use printers that will allow the company to capture much of this market.

What is Desktop Metal (DM)?

The company was founded in 2015 by a group of seven entrepreneurs, engineers, businessmen, and scientists. Together, the group had a vision of creating a process for metal 3D printing that was faster and easier to use than other products on the market. The group’s prototypes were impressive to early investors, with early funders including General Electric, BMW, and Google’s venture capital arm GV contributing over $100 million in venture funding. Companies were eager to explore options to reduce costs and space needed for warehousing parts, and the talented team of Desktop Metal employees, which included several MIT professors, were given funding to develop innovative solutions.

With the money provided by these backers, the company invested heavily into research and development, and in 2017 were able to introduce both a small-scale Studio Model and a large-scale Production Model to the market. Desktop Metal printers offered an advantage in that the printers did not contain any hazardous parts and were easy to use. With no lasers or other dangerous components, these printers could be set up in any office and required no training to use. The products were also more efficient and cheaper to purchase, with parts produced over 100 times faster and 10 times below competitors on the market. For these innovations, the company was named one of the world’s 30 most promising Technology Pioneers by the World by the World Economy Forum in 2017. Desktop metal listed on the NASDAQ in 2020. Rather than going the traditional route of an Initial Public Offering (IPO), the company was listed through a special purpose acquisition company (SPAC). The SPAC was led by billionaire Chamath Palihapitiya and Tesla co-founder JB Straubel.

Why does Desktop Metal (DM) Matter?

Desktop Metal has positioned itself to take advantage of what it has called the “additive manufacturing 2.0” revolution. While traditional 3D-printing, also known as additive manufacturing, was mainly used to create a small number of prototypes to test designs, CEO Ric Fulop sees the next wave of 3D-printing as one where the company is able to mass-produce highly replicable parts at prices that are competitive with the $12 trillion traditional manufacturing industry. Aside from pricing, the company also is a firm believer that clients will shift over to 3D-printing once they see that the quality of product and speed of manufacturing is on par with traditional methods. Using their proprietary Bound Metal Deposition method, which uses a metal powder and polymers to build up the object shape and then places it in a furnace to compact the particles, Desktop Metal has stated that product quality will be on par if not even better than producers produced by traditional manufacturers. Widespread adoption has already begun, with Desktop Metal products being distributed in over 60 countries around the world.

The company currently offers four different products. Depending on customer needs, products range from easy to use, everyday office printers to high volume production systems used in the manufacturing process in sectors such as automobiles and aerospace. In addition to hardware, the company also has also developed software that allows for an interactive and user-friendly design experience. The Live Parts software uses an AI that allows for real-time generative designs that react to changes in materials, resolution, and design objectives. In total, the company holds over 120 patents and is actively expanding both hardware and software product offerings to meet the needs of customers.

Desktop Metal (DM) Prospects

In a highly competitive industry, Desktop Metal has the advantage of being lead by a strong leadership team with a track record of success. With a board of directors that has experience as part of over 60 mergers and acquisitions, the company is well-positioned to respond to any strategic opportunities that may arise. The company has stated that it is actively exploring 10 different M&A opportunities, and any move that will create positive benefits will surely be acted upon. With the so-called next-generation additive manufacturing, 2.0 arriving, consolidation in the sector is likely, with vertical integration and economies of scale being key drivers of success moving forward.

Desktop Metal has already begun using the money raised from their IPO to scale aggressively, acquiring competitor EnvisionTEC for $300 million. The acquisition brings a client base that includes Cartier, Celgene, Ford, Hasbro, Oral Arts, Stuller, and Smile Direct Club, as well as two new printing platforms that can be used on Desktop Metal developed printers. The company plans to continue using its capital to grow, and CEO Ric Fulop has set an aggressive goal of $1billion in annual revenue by 2025.

Where to Buy Desktop Metal (DM)?

A broker that we recommend is Firstrade.

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Summary

Desktop Metal has placed significant efforts into scaling up their products for use by large companies in their manufacturing process. Their current and future product offerings have a very real potential of disrupting the multi-trillion-dollar traditional manufacturing industry. The company has captured the attention of both investors, and the strong capital position the company finds itself in is an advantage that is going to allow for significant growth over the coming years.

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Baggio has been an investor in the technology space for over half a decade. He uses the perspectives gained from his work experience in the private, public, and non-profit sectors to guide his investment strategy, with a specific interest in the potential of emerging disruptive technologies.

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