It is an understatement to say SPACs are performing very well of late. Our previous article, on the QuantumScape Merger (QS), for example, explains our success in identifying an approximately 700% move in a very short period of time. Similarly, Luminar Technologies AKA $LAZR ($GMHI pre-merger) returned approximately 300% in about a month. And last, but not least, one of our favorites, Desktop Metal (NYSE: DM) ultimately popped about 160% in a few trading days. These are gargantuan returns that hedge fund managers only dream of…and we predicted all three of them here. (This is the part where you subscribe to make sure you do not miss on future big plays). Unfortunately, for those that got a little greedy and held too long, are now experiencing a major dip. QuantumScape, Luminar and Desktop Metal are now well off their highs, and trending down. A nosedive, in modern stonk parlance, if you will. No need to fret, Alternative Finance News is here to explain this, and what you can do. Below, we identify the primary reasons for Why Desktop Metal Stock is Plummeting.
Let’s be blunt. Stocks that skyrocket 100%+ in a few trading days generally come back down to earth pretty quickly.
If you are up 100%+ on a stock, option or crypto (pretty much everything we write about), it is wise to either take the Win or hedge yourself.
That is just common sense.
Thankfully, we will have a paid real time trading service soon, so please keep an eye out for that.
In any case, let’s see why Desktop Metal stock is plummeting right now.
First, and foremost, the technicals. It’s almost ALWAYS the technicals. See chart below:
Above is the price and 4 hour chart of DM. As you can see highlighted in yellow, the stock went way out into crazy pants land, reaching about a 95 RSI on this chart.
Technically speaking, anything over 70 RSI is considered “overbought,” and is generally a sell signal.
This is not always the case, many stocks hit just above overbought and stay there for a while.
In Desktop Metal’s case, the RSI was so extreme, the stock took about a 50% dip in just a few days.
I don’t know about you…but it looks like there is a lot blood in the streets, as they say.
SUPER MEGA BULLISH
For the most part, there is really no reason that the stock fell beside from the technicals. Unless you are aware of one, in which case please comment below.
Full disclosure, I sold the stock and warrants when it hit about $20. I have learned over time that greed will drain one’s trading account pretty quickly.
In any case, as the headline states, we are extremely overly bullish on the stock.
According to a press release from Business Wire:
- Desktop Metal and Trine Acquisition Corp. (NYSE: TRNE), a special purpose acquisition company, today announced they have completed their business combination; the combined company begins trading on the NYSE under the ticker symbol “DM” on December 10, 2020
- Desktop Metal is now the only publicly traded pure-play Additive Manufacturing 2.0 company, offering the fastest metal 3D printing technology in the market, up to 100 times the speed of legacy technologies(1)
- The additive manufacturing industry is estimated to grow from $12 billion to $146 billion this decade as it shifts from prototyping to mass production(2)
- Leo Hindery, Jr., legendary technology investor and operator, joins Desktop Metal’s board
Oh! Merger complete? Bullish.
The only publicly traded “pure-play additive manufacturing 2.0 company” SUPER bullish!
A legendary investor you say? MEGA bullish!
Big Shot Investors
Generally speaking, big shot investors are usually a good sign. That is just one of the many bullish signs when considering investing into Desktop Metal company.
In fact, here are 13 other factors you should know if you are interested in investing in DM.
From an InvestorsPlace article on the company:
- The company is now trading on the New York Stock Exchange under the DM stock ticker.
- Its warrants are also listing on the same exchange under the DM.WT ticker.
- Following the completion of the merger, the new company changed its name to Desktop Metal.
- The SPAC merger gives Desktop Metal $580 million of gross proceeds to work with.
- That includes a mix of cash from Trine’s trust accounts and from private investments in public equity (PIPE).
- The company was founded in 2015 and is based out of Burlington, Mass.
- Its focus is on developing advanced manufacturing with new 3D printing solutions.
- The P-50 is one of its major devices and is expected to achieve manufacturing speeds up to 100 times faster than those of legacy devices.
- Desktop Metal is preparing for volume commercial shipments of the P-50 in the second half of 2021.
- A sooner release is the Production System P-1, which uses much of the same systems as the P-50.
- The company says that it plans to release this device sometime in the fourth quarter of 2020.
- Desktop Metal also has other commercial 3D printing solutions in the work that will be releasing in the near future.
- DM has room to grow as the advanced manufacturing industry is expected to increase from $12 billion to $146 billion during this decade.
Chew on that!
Big Shot Investors
Finally, and my favorite part about analyzing any stock, the investors.
The investors behind a project are usually the number one reason why a stock goes parabolic or not. You’re welcome.
Here is a link to the company’s Crunchbase investor profile.
The most prominent investors into this behemoth are:
If you have time, look into these investors…they are a BIG deal.
To sum it up, the top investors in the company are GE Ventures, Saudi Aramco Energy Ventures, Google Ventures (GV…yes, that Google), Koch Industries, Ford Motor Company and New Enterprise Associates (largest third party shareholder).
Altogether, according to CrunchBase, the company has received 9 rounds of funding for a total of $712 Million dollars.
That’s a lot of cash, is someone expecting this to be a big deal?
I THINK SO.
Just for fun, here are some great videos to watch for your research:
“Desktop Metals CEO Ric Fulop Discusses DM’s NYSE Debut”
How their 3D metal printing machines work:
Desktop Metal’s YouTube channel.
Desktop Metal’s Company Website.
Conclusively, we believe the SPAC pump is not just a bubble. This form of IPO is not just a fad, it appears likely here to stay for the foreseeable future.
However, we recommend doing a lot of homework on SPACs, considering not all are winners.
Nonetheless, Desktop Metal, is one of our favorite plays, and we will continue to buy every major dip.
This may end up being the alpha of the industry, and we would like to not miss that investment opportunity.
Hope this helps explain why Desktop Metal is Plummeting (and why we are even more bullish now).
Remember…”Buy when there’s blood in the streets.”
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