Alarm Bells Are Ringing For Desktop Metal Stock
Alarm Bells Are Ringing For Desktop Metal Stock
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
3D printing startup Desktop Metal (NYSE:DM) has gotten itself into a jam. The firm previously raised hundreds of millions of dollars from well-known investors including Google Ventures (NASDAQ:GOOG, GOOGL) and Ford Motor (NYSE:F). However, Desktop Metal has struggled to commercialize its technology, and the value of DM stock has collapsed 82% over the past 12 months.
Yet, even after this steep fall, things could still get worse for shareholders. That's because the company's technology has yet to prove it's ready for primetime, and Desktop Metal's balance sheet is shaky, forcing it into dilutive financing arrangements.
This combination could prove dire for DM stock holders.
DM Desktop Metal $2.26A Missed Opportunity
What's really unfortunate for Desktop Metal is that this should have been the year for 3D printing. With the brutal supply chain shortages, it was a golden opportunity for 3D printing companies to come up with tailor-made solutions for factories. Being able to print parts on site would have been a game-changer during the height of the pandemic-induced supply chain chaos.
Desktop Metal did manage to grow its revenue by 583% in 2021 to $112.4 million. But the company only booked a gross profit of $18.3 million on those sales. This shows Desktop Metal had minimal pricing power despite the seemingly ideal conditions in which to sell its products.
Meanwhile, the company's cost of sales roughly tripled last year to around $94 million, and general and administrative costs nearly quadrupled to $78 million. Generally, you're having issues with your business model when you spend more on corporate overhead and sales than you generate in revenue.
Balance Sheet Problems Intensify
Desktop Metal's net loss skyrocketed from $34 million in 2020 to a loss of $251 million over the past 12 months. That's a cool quarter of a billion dollars right there.
With that in mind, it's worth noting that Desktop Metal had just $206.5 million of cash and cash equivalents left as of March 31. At a loss rate of $251 million per year, that remaining cash would run out in about 10 months, or by early 2023. And given Desktop Metal's low and sinking share price, raising large amounts of capital through the stock market looks increasingly implausible for the company.
Thus, it has resorted to convertible debt financing to try to fill the gap. Desktop Metal issued $100 million of five-year convertible bonds at a 6% interest rate in May. A 6% interest rate may not sound too bad at first glance. However, the bondholders will also have the right, starting in 2026, to convert their bonds into DM stock at an initial conversion price of just $1.66 per share.
This means that Desktop Metal is having to pay a fairly high interest rate to access a mere $100 million. That would fund less than six months of the company's operating losses at present. And in return for getting this loan, if Desktop Metal manages to turn things around, shareholders will get hit with lots of dilution at a low stock price.
Adding insult to injury, Desktop Metal shopped $150 million of these bonds but only found buyers for $100 million worth. Even with such generous terms for the bond purchases, market demand was lacking.
DM Stock Verdict
Desktop Metal's combination of wafer-thin profit margins and sky-high corporate overhead just isn't going to cut it. A year ago, the market was willing to fund this sort of speculative company with large operating losses. Times have changed.
Desktop Metal needs to rapidly slash overhead before it runs out of remaining cash. And, even if it does so, it's still unclear if the company's technology has sufficient market fit to prove commercially viable on a significant operating scale.
For investors that want exposure to the 3D printing industry, there are safer alternatives than Desktop Metal. Graphics software companies like AutoDesk (NASDAQ:ADSK) and Adobe (NASDAQ:ADBE) are particularly compelling options since they make tools that facilitate the design and manufacturing of goods using 3D printers. In this way, regardless of which 3D printing manufacturers win out, an investor stands to benefit.
DM stock, on the other hand, is an incredibly risky bet. Investors may lose what's left of their funds in Desktop Metal given the company's elevated cash burn.
On the date of publication, Ian Bezek 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.
The post Alarm Bells Are Ringing For Desktop Metal Stock appeared first on InvestorPlace.
投資者廣場-股市新聞、股票建議及交易提示
3D 列印啟動 桌上型金屬 (紐約證券交易所:DM)已經陷入了果醬。該公司以前從知名投資者那裡籌集了數億美元,包括 谷歌創投 (納斯達克:傻瓜, 傻瓜) 及福特汽車 (紐約證券交易所:F).但是,台式機金屬一直在努力將其技術商業化,在過去的 12 個月中,DM 股票的價值已經崩潰了 82%。
然而,即使在這個陡峭的下跌之後,股東的情況仍然可能會變得更糟。這是因為該公司的技術尚未證明其已準備好迎接黃金時段,而 Desktop Metal 的資產負債表不穩定,迫使其進入稀釋的融資安排。
這種組合可能對 DM 股票持有人來說是可怕的。
DM 桌上型金屬錯過的機會
對於桌上型金屬而言,真正不幸的是,這應該是 3D 列印的一年。由於供應鏈短缺嚴重,這是 3D 打印公司為工廠提供量身定制解決方案的絕佳機會。在大流行引起的供應鏈混亂的高峰期,能夠在現場打印零件將是一個改變遊戲規則的改變。
桌上型金屬公司確實設法在 2021 年將其收入增長了 583%,達到 1.12.4 億美元。但是,該公司只在這些銷售中預訂了 18.3 萬美元的毛利。這表明,儘管銷售其產品的看似理想條件下,Desktop Metal 的定價能力最小。
與此同時,該公司的銷售成本去年大約增加了兩倍,達到 9400 萬美元左右,一般和行政成本增加了近兩倍,達到 7,800 萬美元。一般來說,當您在公司開銷和銷售上的花費超過您產生的收入時,您的商業模式會遇到問題。
資產負債表問題加劇
桌面金屬的淨虧損從 2020 年的 3400 萬美元飆升至過去 12 個月的 2.51 億美元虧損。這是一個很酷的四分之一十億美元就在那裡。
考慮到這一點,值得注意的是,截至 3 月 31 日,桌上型電腦金屬只剩下 206.5 億美元的現金和現金等價物。以每年 2.51 億美元的損失率,剩餘現金將在大約 10 個月或 2023 年初用完。由於 Desktop Metal 的股價低且下沉,因此通過股票市場籌集大量資本對公司來說似乎越來越難以置信。
因此,它已訴諸可轉換債務融資,試圖填補空白。桌面金屬 5 月以 6% 的利率發行 1 億美元的五年期可換股債券。乍看之下,6% 的利率可能聽起來不太糟糕。然而,從 2026 年開始,債券持有人也有權以每股 1.66 美元的初始轉換價將債券轉換為直銷股票。
這表示桌上型電腦金屬必須支付相當高的利率才能存取 1 億美元。這將為公司目前的經營虧損提供不到六個月的資金。作為獲得這筆貸款的回報,如果 Desktop Metal 設法扭轉事情,股東將以低廉的股票價格受到大量稀釋的打擊。
加上侮辱傷害,台式機金屬購買了 1.5 億美元的這些債券,但只找到了價值 1 億美元的買家。即使在購買債券方面如此慷慨的條件,市場需求也不足。
DM 股票判決
桌面金屬的晶圓薄利潤率和天高企業開銷的組合只是不會削減它。一年前,市場願意為這種投機性公司提供資金,而且經營損失很大。時代已經改變了
桌面金屬需要迅速削減開銷之前,它用完剩餘的現金。而且,即使這樣做,仍然不清楚該公司的技術是否有足夠的市場適合在顯著的經營規模下證明商業上的可行性。
對於希望接觸 3D 列印產業的投資者來說,有比桌上型金屬更安全的替代方案。圖形軟件公司喜歡 歐特克 (納斯達克:阿德斯克) 及Adobe (納斯達克:ADBE)是特別引人注目的選擇,因為他們使用 3D 打印機便於設計和製造商品的工具。通過這種方式,無論哪個 3D 打印製造商贏得勝利,投資者都可以從中受益。
另一方面,DM 股票是一個非常危險的賭注。鑑於公司的現金燃燒升高,投資者可能會損失桌面金屬中剩餘的資金。
在發布之日,Ian Bezek 在本文中提到的證券中沒有(直接或間接)任何頭寸。本文中表達的意見是作者的意見,受投資者廣告發布指南的約束。
後報警鐘聲響起桌面金屬股票首次出現在 InvestorPlace.
譯文內容由第三人軟體翻譯。
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