When Cathie Wood goes shopping, people pay attention. The founder, CEO, and primary stock picker of the Ark Invest family of aggressive growth exchange-traded funds announces her buys and sells daily. With her style of investing back in vogue, the market's following her every move the way they did in 2020 when she had a Midas touch.
She doesn't buy and sell many stocks on any given day, so repeat purchases of the same name are going to turn heads. She has now spent the last seven trading days buying into one of the more obscure names in the Ark Invest portfolio. If you don't know about Velo3D (VLD 3.66%), it may be just a matter of time.
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The art of the parts
Companies using heavy machinery to create their products -- particularly those in the aerospace, aviation, industrial power, and oil and gas industries -- can't afford to be offline for long. Their manufacturing machinery consists of hard-to-get parts, and additive manufacturing (more commonly known as 3D printing) is the quickest path to secure rare or even unique components.
Velo3D makes the Sapphire line of industrial 3D metal printers. This is heavy duty stuff: microturbines, high-pressure tanks, heat exchangers, and the mission-critical parts they need to keep humming. Creating the necessary components in-house takes time, but it will typically be a lot quicker and cheaper than procuring rare parts from third-party vendors. As a full-featured platform, engineers can use Velo3D software to design whatever they need.
You might never need a turbopump to launch your rocket engine, but there's enough demand to drive demand for Velo3D's end-to-end manufacturing solutions. Revenue will nearly triple in 2022, and analysts see the top line growing by more than 65% this year.
Wood is a fan of growth, and she hasn't shied away from Velo3D despite the stock having a price tag that's lower than a Happy Meal and a current enterprise value that's just shy of $500 million. If a disruptive business model is growing it's going to catch her eye as well as her order sheet.
Velo3D delivered revenue of just $27.4 million in 2021, and until November it was targeting $89 million for all of 2022. Then came the crushing third-quarter results. Revenue rose 119% to reach $19.1 million, but it was roughly $5 million short of what Wall Street pros were forecasting. Adding insult to injury, the $89 million that Velo3D had been modeling for revenue in 2022 was whittled down to between $75 million and $80 million. It's a pretty dramatic revision, especially when it has already recorded nearly $51 million in revenue through the first nine months of the year. It translated into Velo3D generating $24 million to $29 million on the top line for the final three months of 2022, a shortfall of more than $6 million from previously implied guidance. Assuming the worst, analysts perched near the low end of the new range with a consensus revenue estimate of $25 million.
It's against this dreary backdrop that Wood began buying Velo3D again at the start of last week. She got some good news after the close on Monday of this week, the sixth consecutive day of her Velo3D buying. The 3D printing stock announced preliminary financial results for the fourth quarter. It now sees revenue landing between $29 million and $30 million for the fourth quarter, boosting its full-year outlook to between $80 million and $81 million.
Velo3D stock only rose 4% on Tuesday following the welcome financial update, but Wood has already seen the shares soar 41% over the last seven trading days. It's a small enough stock that a steady diet of sizable Wood buy orders can move the shares, but good news this week warrants a bump. It had a healthy backlog of $66 million in orders at the end of September. It warned back in November that the supply chain disruptions that caused shipment delays in the third quarter could potentially impact the following period, but it's doing better than it initially feared.
