I incorporated Nano Dimension (NASDAQ:NNDM) as part of my speculation portfolio. So far, this wager has not panned out very well. Therefore, you may want to take my take of NNDM stock with a huge grain of salt.
Nevertheless, I’m still going to stay the course with Nano Dimension. For one thing, I’m not badly hurting from the portfolio inclusion. Let’s just say that diversification is a real asset, especially when the market decides to turn against you. But second, unprecedented factors may be imposing a headwind for NNDM stock that might not last indefinitely.
For instance, one of the reasons why investors initially caught the Nano bug – which ultimately sent shares closing near $17 in late January and early February – is its industrial 3D printing business or additive manufacturing (AM).
As Grand View Research pointed out, the global 3D printing market could “expand at a compound annual growth rate (CAGR) of 21% from 2021 to 2028,” resulting in a market that generates nearly $63 billion in revenue.
Because of the underlying prowess in AM, NNDM stock has huge implications for electric vehicles, an incredibly popular topic. According to Nano Dimension’s website:
The additive electronics from Nano Dimension enable fast prototyping and manufacturing of conductive components, encapsulated sensors and smart surfaces, all of which can offer car makers the flexibility of printing an entire circuit board or just part of a connector, as well as the ability to develop the RF and digital sections of the board in parallel to test concepts on the fly.
While automakers signaled that EVs are the future, one major problem sprung up: the global semiconductor shortage. Everyone in the automotive industry has suffered an impact, especially EVs since they utilize so many electronics. With continued pain, Nano suffered badly in the market.
NNDM Stock Requires Forward Vision
In prior InvestorPlace articles, I shared how I sold my old car to CarMax (NYSE:KMX). Honestly, I was shocked at how much the company offered me, well above what dealerships proposed. Then again, it’s the insanity of the current marketplace. Great for folks like me, not so great for NNDM stock (and those who bought it like me).
Even billionaires like Jeffrey Gundlach couldn’t exempt themselves from this unusual phenomenon. Gundlach recounted how he couldn’t buy a new truck and had to settle for a used one for a relatively hefty premium.
Logically, this global supply chain disruption imposed – and still imposes – much pain on NNDM stock. But the question is, how long will this dynamic last? To me, the market seems like it’s assuming that this is an indefinite period of pain. If the Street is wrong, though, NNDM could very well fly higher.
Of course, dealing with the automotive market is a tricky proposition. Not only do you have the uncertainties of global supply chains post-pandemic, but you must also deal recognize the troubles with our economy. If we suffer a market crash, for instance, that could severely impact one of Nano’s core business.
At the same time, I think there’s ample opportunities with the company’s defense division. Thanks to AM technologies, it’s now possible for defense contractors to rapidly convert paper innovations to actual physical experiments. Judging from the geopolitical environment, the U.S. and western countries need all the advantages they can get.
You see, one of the biggest military threats we face is that Chinese and Russian soldiers are willing to die for their respective countries for pennies on the dollar. We’re patriotic, don’t get me wrong. But take away the comparatively lofty military salaries, stipends and pension plans and you can see why we necessarily have a limited force numerically speaking.
Our military advantage comes from technology, not sheer numbers. And technology is what Nano Dimension is all about.
Mind the Gap
Nevertheless, this is a forward-looking argument. Cynically, world peace is one of the biggest headwinds for NNDM stock. If we get that, then Nano will need to abandon its defense business. Obviously, that’s not going to happen anytime soon. But the illustration demonstrates that you need a little faith to expose yourself to NNDM.
Plus, I’m concerned about the economy. While the defense division opens big possibilities, a severe hit to the global economy would not be helpful for NNDM stock in the least. Therefore, if you’re going to follow me on this journey, do so with your eyes wide open.
On the date of publication, Josh Enomoto held a LONG position in NNDM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.