Desktop Metal is company (TRNE) that is leading the additive manufacturing trend as their 3D printing technology allows the user to 3D print with metal and equally as important, at a speed 100X faster than Desktop Metal's competition. It was announced earlier this month that Trine Acquisition Corp (TRNE) would merge with Desktop Metal stock to take Desktop Metal stock public. Today on 9to5investing, you are not going to want to miss hearing my bull thesis on additive manufacturing and Desktop Metal stock as you could be getting in on the ground floor with Trine Acquisition Corp; the Special Purpose Acquisition company taking Desktop Metal public.
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What is this additive manufacturing? Additive manufacturing is basically just using computer aided design software to deposit material, layer by layer, to ultimately create precise geometric objects or parts. The most common way that this process is carried out is through 3D printing and the process has applications in an array of industries including vehicle manufacturing, industrial automation, and aviation just to name a few. This additive manufacturing process has a number of advantages over traditional manufacturing but I am just going to talk about three of the main ones. The first advantage of additive is a considerable reduction of waste. The 3D printer just builds layer by layer using the exact amount of material that is necessary. The second advantage of additive is the possibility to design parts that have superior characteristics that might have never been possible before using any other manufacturing process. This advantage is difficult to explain because this is a broad statement but the best example that I have heard is creating new designs for parts using biomimicry. Examples include strength per unit weight, heat transfer capacity, and metals with graded microstructure. The third advantage of additive manufacturing is that these parts could theoretically be built with a 3D printer anywhere where 3D printer is located and therefore said part would be available almost instantly. Instead of having to wait, the part could literally be where it needs to be in hours or even minutes since it would just be printed on site. It would be impossible for me to cover all of the benefits and possibilities of additive manufacturing using 3D printers in a short video but just understand that additive is a gamechanger. If you take nothing else from this segment, just remember that the additive market is expected to grow 11x to $146B over the next decade.
What are you investing in by buying shares of TRNE today? In their investor presentation, Desktop Metals says that the opportunity here is to build the first $10 billion Additive 2.0 company. They have several products that are differentiated mainly by type of material and volume potential but most notable model in my opinion is the Production System as this is the model that could really take additive manufacturing to that next level of having mass production capabilities. Desktop Metal’s 3D printing platform is significantly faster, more cost effective, and higher quality than its competitors. As I alluded to near the beginning of this video, Desktop Metal’s Production System model actually prints at about 100 times the speed of other binder jetting and laser powder bed fusion systems using comparable materials and processing parameters. If additive hits a tipping point and grows exponentially over the next 10 years like Desktop Metal’s CEO predicts, the company probably won’t even be able to keep up with the demand for these 3D printers. Another aspect of the company that I really like is the founding team, which includes Ric Fulop and 4 MIT engineering professors. I also like the fact that you have investing heavy weights backing the company such as Chamath Palihapitiya and even Ford Motor Company as they seem to understand the necessity of relentless innovation when you have players like Tesla coming into the automotive game in a big way recently. From a fundamental perspective, there is a lot of favorable characteristics at play with Desktop Metal.
I mentioned this stock in my video last week because I believed the risk / reward ratio on this name was very favorable at that time… and at these somewhat elevated price levels, I still hold that same belief actually. I personally think the maximum likely risk with this stock is about a $1.68/share and while the reward is very hard to predict, I would be surprised if this isn’t a $20+ per share stock post-merger.
I think that investing in TRNE to eventually get into Desktop Metal is a great opportunity, especially at these lower-risk price levels. To keep my full disclosure policy intact, I will tell you that I did buy 1,000 shares of TRNE at $11.29 per share last week.