Meet Your 3D Maker
Great Ones, I pride myself on staying on top of the latest tech investing trends. In Great Stuff, I’ve covered everything from electric vehicles (EVs) to hydrogen power to semiconductors to 5G and streaming.
There is one trend, however, that I’ve shied away from … until now: 3D printing.
Let’s step into Mr. Peabody’s Wayback Machine for a bit of background. It’s flashback time!
I’ve covered the stock market for more than 15 consecutive years. But during that time, I took on a few side projects here and there. Gotta pay the bills, am I right?
One of those side hustles was writing machine manuals for a 100-year-old, storied company in Harrison, Ohio, called Cincinnati Inc. It basically makes the machines that make the machines that make the stuff you buy. A machine shop’s machine shop, if you will…
Cincinnati Inc. makes press brakes, shears, laser burn tables and powdered metal presses. Oh, and 3D printers for additive manufacturing. You can click here to check it out if you’re interested.
While at Cincinnati Inc., I helped create a manual for an advanced 3D printer. The thing is flashy and uses carbon composite materials to print literally anything. Cincinnati used it to 3D print a car!
I was impressed, and having helped create the operating manual, I knew how these things worked. I’ve been jazzed about the possibilities ever since.
At the same time, the investing world went gaga over stocks like 3D Systems (NYSE: DDD). DDD shares hit a high just shy of $100, driven by hype and promises. I watched biotech Organovo (Nasdaq: ONVO), a specialist in human tissue printing, skyrocket to nearly $300.
3D printing was going to change the world!
Until it didn’t, and then … it all collapsed. (Not Cincinnati Inc., of course. It’s still alive and kickin’. They’re good people.)
I watched investors get burned as DDD and ONVO plummeted. 3D printing revenue and growth didn’t live up to Wall Street’s hype machine. The world, it seems, wasn’t quite ready for 3D printing. And at the time, 3D printing wasn’t quite ready for the demands of modern manufacturing.
I’ve been hesitant to dive back into this section of the market ever since.
Nice story. So … what’s your point?
My point, my oh-so-calloused reader, is that I have some firsthand experience in the 3D printing world — on both the manufacturing and investing sides. And I’m telling you things are different now.
3D printing is finally getting the acceptance and attention it always deserved. The 3D printing market is finally ready for prime time.
For instance, 3D Systems not only generates significant revenue growth via metal, carbon and plastics printers … it’s branching out into printing human tissues and organs, much to Organovo’s dismay.
Now, I want to throw a word of caution out there. While the hype surrounding 3D printing companies isn’t as ridiculous as it was back in 2013, it’s still a concern. I mean, just look at 3D Systems. DDD stock caught the Reddit buzz and is considerably overvalued as a result.
If you’re looking to jump into the red-hot 3D printing market for the first time, you don’t want to do so blindly … take it from someone who’s both worked in the sector and invested in the 3D market before. You will get burned without solid research.
Speaking of which, Paul believes one North Carolina stock is already No. 1 in the race! It’s cracked the code to this technology, which is turning a billion-dollar niche industry into a $100 trillion global manufacturing power, according to the World Economic Forum.
The Good: Shopify Stupefies
You ever get the impression that Wall Street doesn’t like reality? Earnings season gives me that feeling in spades. Take Shopify (NYSE: SHOP), for instance…
The company reported earnings that ballooned 267% year over year to $1.58 per share, topping Wall Street’s estimates by $0.32 per share. Revenue soared 94% from 2019 to $977.7 million, also putting analyst estimates to shame.
Shopify literally posted impressive growth across the board, as the pandemic pushed merchants to expand operations online. And yet, the stock fell more than 7% today.
The reason? Shopify had the audacity to say that 2020’s pandemic growth was not the norm — a fact that any investor worth their salt should’ve already known.
The company said that 2021 revenue growth would be “a number lower than the record in 2020, but higher than any year prior to 2020.”
Now, that sounds like good news to me. Shopify expects to grow at a higher-than-normal rate even after the pandemic is over. It makes you wonder just how detached from reality valuations are right now.
You know what we always say in situations like this: If you’re so inclined, today’s plunge following a stellar quarterly report could be a buying opportunity for SHOP.
The Bad: Dreamscape
Anyone else remember this really cheesy Dennis Quaid movie from 1984? No?
Shame … ‘cause it’s a great segue into Wall Street’s obsession with QuantumScape (NYSE: QS), which is just as cheesy.
For the record, QuantumScape doesn’t sell anything. And it won’t for about three years. The company is developing fast-charging, high-density solid-state batteries.
Analysts believe they will be a game-changer for the EV market and for power storage in general … when (and if) they get here.
Today, QuantumScape released its fiscal fourth-quarter report. Since the company doesn’t sell anything, the results were as expected. Per-share losses soared from $0.06 last year to $2.41. There was no revenue.
In fact, MarketWatch calls QuantumScape a “pre-revenue company.” You know you’ve jumped the shark in a particular market when financial media outlets start throwing around terms like “pre-revenue company.”
The company appears to be making progress, however. It announced plans to build a “pre-pilot line facility” to produce “100,000 engineering cell samples per year.” Keep in mind … those are samples, not saleable end products. The company hopes to begin producing saleable products by 2023 — quite a few pre-revenue quarters away.
I give QuantumScape a hard time, but if we’re being honest, this is all fine and dandy for a cutting-edge tech firm. The company is making progress toward a product that could revolutionize the battery market.
What isn’t fine and dandy, however, is that QS soared more than 13% on this pitiful quarterly report. If you needed more proof that valuation doesn’t mean anything in the market right now or that Wall Street is divorced from reality, QS is it.
The Ugly: Hear Me Out…
Electric jet skis. Electric. Flippin’. Jet skis! No, wait, this is even better: Imagine … electric snowmobiles!
Did Mr. Great Stuff throw a lil’ something extra in his Frosted Flakes this morning?
I wish; I’ve just been ogling videos from Taiga — a Canadian electric motorsports maker going public soon.
Taiga also makes electric jet skis for you sun-soaked Great Ones in South Florida who didn’t wake up on Hoth today. (And yeah, I know Taiga doesn’t technically make “Jet Skis,” but I’m not calling these things “water scooters,” and you can’t make me.)
Taiga’s all-electric product lines seek to minimize motorsports’ environmental impact and noise pollution. EVs and a very selective target market … sounds like a SPAC kind of shindig, right?
It is: Taiga is going public via Canaccord Genuity Growth II Corp. (TSX: CGGZ.UN), expected to finalize in April. This would put Taiga’s market cap around, say, C$537 million, or $422 million in freedom dollars.
So, what’s the big deal? And what’s so ugly about Taiga? I’m already picking out my sled pre-order now, bub.
While my inner eight-year-old geeks out over snowmobile stunts, my investing side has a few bones to pick. Taiga is carving out an even smaller niche of an already niche market. If you weren’t already scouting out snowmobiles … an electrified snowmobile probably won’t swing you.
And let’s talk powersports logistics, because … when else can we?
The estimated range is still quite low across Taiga’s vehicles, and just think: If you’re worried about being stranded in an electric car, miles from any charging station around … how would you feel when your jet ski conks out on you? I mean, you’d literally be up the creek without a paddle.
Sure, we’re all hypothetical now, but don’t come calling me when you can’t recharge a snowmobile atop a dang mountain…
Now, I wouldn’t say we’ve hit peak SPAC saturation — SPACuration? — but I doubt this company could go public via a traditional IPO.
In fact, Canaccord Genuity wasn’t even looking for electric motorsports action when it went to the market blank check in hand. Canaccord initially set off looking for a cannabis stock to snatch up … as its name more than implies.
This is like running to the store for milk and eggs but coming home with a new PlayStation 5 (and no, I still haven’t let this go).
If you’re really interested in the company, I’d say steer clear of Taiga until it gains a bigger foothold on its target market. You know … the same story as every other EV SPAC we’ve seen lately, save for Hyzon.
Welcome to poll day, Great Ones!
In last week’s poll, we asked for your hot takes on Tesla’s tug-of-war with the Chinese EV market. Namely, if you think Tesla’s days in China are numbered.
We all know that Chinese consumers vastly prefer local car brands, and Tesla’s place as a status symbol is all but set in stone. Most of you, as it turns out, don’t have much hope for Elon and co. holding out long-term in China.
47% of you think Tesla’s Chinese vacation will soon end.
Of course, there’s the 36% of you voting “Heck no, ‘Murica all the way!”
And a final 17% of Great Ones are wondering why people are still buying Tesla. Personally, I count myself in that last category, but you don’t need me ranting to you — again — about why Tesla needs China more than China needs Tesla.
What we need (besides more cowbell) is another fresh Poll of the Week — on the double!
You listened to my Ted Talk on 3D printing, sector hype and that whole “additive manufacturing” ballyhoo. But … what about you? Have you invested in 3D printing?
Click below and let me know!
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Don’t forget: If you’re still looking for your way in on the 3D printing boom, we’ve got you covered. Just click here!
Of course, our weekly polls are far from the only way you can reach out to us here. If you’ve not tuned in for Reader Feedback on Thursdays, you’re in for a treat. By tomorrow’s dawn, the Great Stuff team will be waist-deep, wading through the virtual tsunami of emails y’all leave us each week.
You still have time to make your voice heard for tomorrow’s issue — but the clock’s ticking, and I don’t see you scribblin’ away yet.
GreatStuffToday@BanyanHill.com. Swing by and drop us a line whenever the market muse calls on you.
Have you landed any great trades recently? We’re in! Brag away to your fellow Great Ones. Got a new trade in your sights? I’m game! Let me know what stocks you’re interested (or invested) in. And, if you’re just looking to get a rant off your chest, we’re down for that too.
Remember: GreatStuffToday@BanyanHill.com. Jot us a quick memo (or a whole novella, why don’t you) and tune in for tomorrow’s Reader Feedback!
Until next time, stay Great!
Editor, Great Stuff