Bet On Metal.
Good morning gang! Every Monday from now on we will present our top spread trade idea of the week. This week, we are looking at a 3d printing spread between Desktop Metal & NanoDimension, and Stratasys & 3D Systems.
If you look out 5-10 years in the 3d printing space, most of the uses for 3d printing and additive manufacturing will be within the automotive, semiconductor, and aerospace segments. Digital manufacturing and tooling free factories will begin to crop up, and they will outcompete the competition - partly due to speed and cost, but partly due to the speed at which they will be able to iterate. When building something simply requires changing a CAD file on your computer, it will lead to an explosion in new designs and efficiency. In fact, it's already happening:
youtu.be/kz165f1g8-E
There will still be some uses when it comes to polymer printing, but the majority of the printing market will be won by those who are first and best into the metal space. Out of the public companies out there right now, this best describes DM and NNDM. DM is the most Apple-like company in the bunch - having a concentrated product line, a sleek user experience, and partnerships / investments from all the world's biggest manufacturers - Ford, BMW, Dow Chemical, Michelin, Georgia Pacific, etc etc -> sec.gov/Archives/edgar/data/1754820/000121390020023766/ea126039-425_trineacq.htm
NNDM is an even smaller Israeli startup, but they are on the path to producing 3d printers that can insta-fab semiconductors. A huge market in their sights should they scale to production capacity.
The losers in the segment will be Stratasys and 3D systems. Both companies are established players in the polymer game, but they are both extremely slow moving, have taken forever to begin rolling out AM products. Their product lines are sloppy and unfocused, and they lack expertise in the metal arena.
While DM and NNDM have richer valuations than DDD and SSYS, this is one of the few situations where we truly believe in paying a premium. DM and NNDM will outperform SSYS and DDD operationally over the next 5 and 10 years, and an equally balanced spread trade is a great way to play this dynamic while drastically reducing market and sector risk.
If you look out 5-10 years in the 3d printing space, most of the uses for 3d printing and additive manufacturing will be within the automotive, semiconductor, and aerospace segments. Digital manufacturing and tooling free factories will begin to crop up, and they will outcompete the competition - partly due to speed and cost, but partly due to the speed at which they will be able to iterate. When building something simply requires changing a CAD file on your computer, it will lead to an explosion in new designs and efficiency. In fact, it's already happening:
youtu.be/kz165f1g8-E
There will still be some uses when it comes to polymer printing, but the majority of the printing market will be won by those who are first and best into the metal space. Out of the public companies out there right now, this best describes DM and NNDM. DM is the most Apple-like company in the bunch - having a concentrated product line, a sleek user experience, and partnerships / investments from all the world's biggest manufacturers - Ford, BMW, Dow Chemical, Michelin, Georgia Pacific, etc etc -> sec.gov/Archives/edgar/data/1754820/000121390020023766/ea126039-425_trineacq.htm
NNDM is an even smaller Israeli startup, but they are on the path to producing 3d printers that can insta-fab semiconductors. A huge market in their sights should they scale to production capacity.
The losers in the segment will be Stratasys and 3D systems. Both companies are established players in the polymer game, but they are both extremely slow moving, have taken forever to begin rolling out AM products. Their product lines are sloppy and unfocused, and they lack expertise in the metal arena.
While DM and NNDM have richer valuations than DDD and SSYS, this is one of the few situations where we truly believe in paying a premium. DM and NNDM will outperform SSYS and DDD operationally over the next 5 and 10 years, and an equally balanced spread trade is a great way to play this dynamic while drastically reducing market and sector risk.
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