Why Desktop Metal Stock Fell 26% in March

What happened

Desktop Metal (NYSE:DM) stock dropped 25.7% in March, according to data from S&P Global Market Intelligence. For context, the S&P 500 index returned 4.4% last month.

Desktop Metal is a 3D printing company that’s new to the public markets. It went public in December via a reverse merger with a special purpose acquisition company (SPAC).

Several 3D-printed metal objects sitting on a flat surface.

Image source: Getty Images.

So what

We can probably attribute Desktop Metal stock’s weak performance last month largely to market-related factors rather than company-specific ones.

Shares of many highly valued stocks pulled back last month. That included the overall 3D printing group. 3D Systems stock dropped 23.4% in March, while Stratasys fell nearly 25%.

Desktop Metal released its fourth-quarter and full-year 2020 results before the market open on March 15. However, that event had little impact on the company’s stock, which closed the day up 0.8%. That performance was in line with the market’s, as the S&P 500 and Nasdaq indexes rose about 0.7% and 1.1%, respectively.

In the fourth quarter, Desktop Metal generated revenue of $8.4 million and posted a net loss of $25.4 million. That revenue result was up significantly from the third quarter’s revenue of $2.5 million.

For full-year 2020, the company’s revenue fell 38% year over year to $16.5 million. As with other 3D printing companies, the COVID-19 pandemic hurt demand for Desktop’s products last year. Net loss narrowed 13% year over year to $90.4 million, translating to loss per share narrowing 17% to $0.57.

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The chart below shows how Desktop Metal stock has performed so far in 2021.

DM Chart

Data by YCharts

Now what 

Management guided for 2021 revenue of more than $100 million. The huge expected jump in annual revenue is due to an acquisition. In February, Desktop acquired EnvisionTEC, a polymer-focused 3D printing company.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/04/02/why-desktop-metal-stock-fell-26-in-march/

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