I am neutral on Nano Dimension (NNDM) because its strong growth outlook is offset by its lofty valuation multiple and lack of profitability.
Nano Dimension is an Israeli company in the tech hardware industry.
Strengths
Nano Dimension, founded in 2021 in Israel, is mostly focused on 3D printing and provides intelligent machines for the fabrication of AME (Additively Manufactured Electronics).
The company’s machines serve cross-industry needs, and focus on researching and developing the industry of 3D-printed electronics.
Nano’s development of nanotechnology-based inks is what sets the company forward. Nano Dimension has been supplying its nano inks to other fields within the electronic industry as well.
Recent Results
In Q3 2021, the company reported total revenues of $1.34 million, which is a 205.9% year-over-year increase. The increase may be attributed to greater sales of its DragonFly systems, as well as greater revenue generated by Fabrica 2.0 machines.
The company spent a total of $13.7 million on research and development, a 473% year-over-year increase. The total increase may be attributed to an increase in payroll, materials and subcontractors. Meanwhile, the company’s R&D expenses include about $7.3 million on non-cash, share-based compensation.
Other major expenses include sales and marketing, reported at $6.3 million, showing an increase of 154.5% from the same period in the previous year, and general administrative expenses at $4.8 million, which show a significant decrease from the $14.8 million in the third quarter of 2020. It’s worth noting that the decrease may be attributed to a decrease in share-based payments.
The company reported a total net loss of $18.8 million and $0.07 per share, showing improvement since the same period last year, where the total loss was $20.7 million with a loss per share at $0.45.
Valuation Metrics
Nano Dimension stock is pretty difficult to value right now as the company is not yet profitable and is in the early stages of its growth.
That said, it does trade at 45.3x sales on a forward-looking basis, and is expected to grow revenue by 149% in 2021 and another 254.5% in 2022.
As a result of this rapid growth, it is likely that the company will experience significant economies of scale and improve profitability accordingly.
While it is clear that the company still has a long ways to go to justify its current lofty multiple, if it can sustain it this rapid growth pace it could one day prove to be a good value for investors.
TipRanks Stock Analysis
From TipRanks’ stock analysis Smart Score, Nano Dimension earns a 4 out of 10 rating. Based on blogger opinions, the company wins a bullish sentiment. Hedge fund activity has also increased in a bullish trend,while news sentiment is also bullish on the stock.
On the other hand, technicals and TipRanks investors both signal negative sentiments on the stock.
Summary and Conclusions
Nano Dimension is a rapidly growing company in a highly innovative and rapidly growing field. If it can sustain its current robust growth momentum, it might prove to be a decent value at these levels.
That said, the investment so speculative right now that investors should be very cautious before initiating a position.
Disclosure: At the time of publication, Samuel Smith did not have a position in any of the securities mentioned in this article.
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