A 3D Printing Metals IPO from Aurora Labs
It couldn’t have been more than 2 years ago when 3D printing was all the rage with investors until about the beginning of Q4-2014 when the bubble decided to burst. Here’s a look at what happened to the 3D printing metals IPO from ExOne (NASDAQ:XONE) right around that time:
Notice how ExOne (NASDAQ:XONE) traded on hype for a while then settled back down to the opening IPO price before crashing right around where we marked that red “X”. Now let’s look at what happened to the share prices of the two biggest players in the 3D printing market around that same time (1st is DDD, 2nd is SSYS):
It seems that Q4-2014 marked the time when the market decided to settle on more realistic valuations for 3D printing stocks. In the past year though, 3D printing stocks seem to have rebounded. The Nanalyze 3D Printing Stocks motif has actually beaten the S&P 500 year-to-date as seen below:
With 3D printing stocks seeming to have hit a bottom, a new 3D printing metals company called Aurora Labs (ASX:A3D) decided to debut an IPO on the Australian Stock Exchange a few weeks ago.
Founded in 2014, Australian company Aurora Labs has a three-person founders team with a prior background in developing liquid-cooled rocket motors. These individuals worked together over the past two years to develop a 3D printer for metals that is priced at around $40,000 which is much cheaper than those offered by 3D printing metals companies like ExOne which sells metal 3D printers that are priced at around $200,000. We didn’t see too many technical details about the Aurora printers except that they will initially print using titanium and will potentially allow multiple metals to be used in a single print. As for intellectual property, Aurora Labs has 9 pending patent applications filed in their native country of Australia.
Just a few weeks ago, Aurora Labs had a successful initial public offering (IPO) on the Australian Stock Exchange (ASX) under the symbol A3D. The IPO raised $2.12 million USD and shares have traded up over +80% (based on closing price of first day trading) since then giving Aurora Labs a present market cap of around $50 million USD.
Aurora is developing a small form printer (SFP) which is in “pre-production beta” at the moment. Aurora says that they have secured 31 pre-orders so far for their SFP which they plan to go into production with by the end of this year. After they manage to square away their smaller printer, they are promising two industrial-scale printers that we’ll refer to as “medium” and “large”. First, the medium will be developed with a working prototype expected by the end of this year. Based on that prototype, they will then construct a large scale printer for 3D printing metals which is supposed to print 100X faster than current printers at a speed of one ton per day. Here is how they plan to spend the funds they have raised through their successful IPO (all below funds in AUD so multiply by .75 to get USD):
It’s great to see that there is just $1,000,000 needed to complete production of the SFPs and interesting to see an almost equal amount allocated towards developing working prototypes of their two other “medium” and “large” printer models concurrently. If all that effort and money are going into 2 printers that don’t exist yet, then that must mean that they are absolutely positive they will nail those pre-sold orders and go out and sell a whole bunch more after that. We liked that although their funding round was oversubscribed, Aurora chose not to take the additional funds. This must mean that they are very confident the above estimates are accurate. We also like that in their investor presentation they make the following statement upfront:
Then we would expect that they are aware of what stock promotion look like and then try not to behave that way. We don’t really care what grand plans Aurora Labs has. All we care about is seeing delivery of those 31 pre-sales they have already for their small printer. We don’t want to see this go the way of a 3D printing dropout so far, Sigma Labs, which has been promising for years yet never seems to get anywhere on actually delivering sales as seen below:
Aurora Labs needs to show some revenues on their books by no later than end of Q1 2017, even if this means ignoring their planned work on the prototypes to make it happen. When you have pre-sold your product (like people do on Kickstarter all the time), it is very important you get those products into the hands of people that have committed already to being your paying customers. We want to see these production targets clearly stated as being accomplished on the forecasted dates and revenues start to trickle in as a result.
Here at Nanalyze, we complement our tech investments with a portfolio of 30 dividend growth stocks that pay us increasing income every year. Find out which ones in the Quantigence report freely available to Nanalyze subscribers.