Markforged Stock – A Play on 3D Printing and AI

February 27. 2021. 6 mins read

Deciding what to write about here on Nanalyze is pretty easy. We cover 51 different technology themes and there are 52 weeks in a year. One a week, job done. When it comes to Nanalyze Premium articles, we focus on stocks and ETFs that provide exposure to these themes with emphasis on the 28 stocks we’re holding ourselves. With a special purpose acquisition company (SPAC) being launched every minute, we’re faced with some new decisions. Which SPACs do we cover? The answer is the ones with revenues.

We’ve warned about how SPACs do retail investors no favors, and every new SPAC is an opportunity to repeat that warning. There are a few exceptions to that rule, and the SPACs we’ve spoken favorably about all have one thing in common – meaningful revenues. Check it out:

A rare breed of SPACs with revenues – Credit: Nanalyze

In the above chart, you’ll see 2019 revenues for four SPACs – Desktop Metal, Butterfly Network, Velodyne, and Markforged. It’s that last name we want to talk about today.

Today, we already see about 30% of our revenue generated through a stream of recurring revenue consisting primarily of consumables, service and software.


About Markforged Stock

Click for company website

We last talked about Markforged in our piece on Ten 3D Printing Startups That Took Funding in 2019. They were also among our list of 7 of the Most Funded 3D Printing Startups in 2017 and more recently in our featured list of 10 Powder and Binder Metal 3D Printing Companies. In short, they’ve been coming across our radar a lot, and we’re sorta bummed because they’re another attractive company choosing the SPAC route instead of a proper initial public offering. It’s like when you see the shy innocent girl you have a crush on riding on the back of some tattooed guy’s Harley. You know she could have done so much better than that, but you also know why she finds jerks appealing.

The Markforged SPAC is a bit more confusing than usual. The company they’re merging with is one. Yes, small letters and italics because that’s how they roll. This makes it rather confusing because that’s not what their ticker is – something that would actually make sense. Maybe that’s what the lower case is telling us? Who knows, but the real ticker is AONE and it’s trading at $12.75 a share. (That’s only a +27.5% premium since the announcement instead of the usual triple-digit shite.) Since the vast majority of SPACs all trade at $10 a share, it’s super easy to see which ones are being hyped to the moon (QuantumScape, cough, cough.)

On the conference call to investors announcing the deal, the CEO hits on all the right talking points. They’re cost-conscious having spent only $80 million to get where they are today while projecting profitability in four years. They have a solid set of big-name customers across a swath of industries.

Markforged customer list – Credit: Markforged

And in 2019, they realized $73 million of revenues, having realized a compound annual growth rate (CAGR) of +70% since 2015.

Predicting your growth will continue on the same trajectory is a whole lot more convincing than the dreamers who predict triple-digit CAGR for the next five years and have squat for revenues today. Let’s talk about what Markforged does to bring home the 3D-printed bacon.

What Markforged Does

Markforged’s AI-powered and intuitive additive manufacturing platform, The Digital Forge, is comprised of both hardware and software that takes 3D printing to the next level. Their metal and composite printers utilize a wide variety of materials such as their proprietary continuous Carbon Fiber Reinforced (CFR) composites. 

Credit: Markforged

The customer success stories they offer in the deck focus on “cost savings” and “printer payback period,” metrics which help sell a solution regardless of how the market is behaving. Here are some examples of how customers are finding values in Markforged’s industrial manufacturing platform and consequently increasing their adoption:

  • Dana is a $3.5 billion manufacturer of drivetrains that was able to build a tool for axle manufacturing at 10X the speed using 4 Markforged printers. They now use 23.
  • The USMC adopted two printers and realized $270,000 a year in cost savings by creating a tool for field repair. The first printer was paid back in three months and they now operate 29.
  • FritoLay used a Markforged printer to build a tool for their automated assembly line which reduced costs by a factor of 45. The printer paid for itself in nine months and they now operate 35.

As we’ve seen with other 3D printing and robotics companies, complexity is moving to the software layer where big improvements can be realized. Markforge highlights the improvements they’ve been able to make using software alone, as their manufacturing platform analyzes the data from printing over 10 million parts to continuously improve itself:

Software eats the world, innit – Credit: Markforged

As we discussed in our recent piece on 5 Small Global Stocks With FDA Approved AI Algorithms, it’s kind of a given that companies today use AI to do whatever it is they do better. Markforged makes it a point to emphasize their use of AI, but that should be the norm these days, not the exception, especially when it comes to additive manufacturing.

The remainder of Markforged’s investor deck focuses on the size of the Additive Manufacturing 2.0 opportunity, the experience of their management team, and the usual comparables stuff including the following slide which includes 3D printer maker Desktop Metal:

Credit: Markforged

The market cap comparison above uses a share price of $22.58 for Desktop Metal. If we back that out to $10 per share then it’s a bit better – Desktop Metal at $2.6 billion and Markforged at $2 billion market cap. That’s a pretty weak way to compare the two companies though, and we’re more interested in the company which presents the least amount of risk.

Desktop Metal vs. Markforged

Desktop Metal is the only SPAC we’ve invested in so far. It certainly hasn’t been a sleep-well-at-night stock, soaring into the triple-digits because of little more than hype. As we’ve been telling our premium subscribers, we’ve been trimming our position and have now recouped 64% of our cost basis. The appeal of DM is their master plan to consolidate the disparate “3D printing industry” through some key acquisitions. They’ve started following through with that with the acquisition of EnvisionTEC which gives them volume production polymer capabilities.

One problem with SPACs is that they don’t provide enough information for us to make an informed investment decision. For example, most SEC filing documents provide you with commentary on how concentrated revenue streams are. Markforged has $70 million in revenues across 10,000 facilities with an incredibly diverse client base. We’re immediately interested in knowing if any customer constitutes more than 10% of their revenues, a very critical piece of information for risk-averse investors that’s missing here. In the CEO’s letter, he talks about filing an S-4 which should contain some of the missing details we’re looking for. Until that document is filed, we don’t have enough information to make an informed investment decision here.

On the topic of share price premium, we’re not paying much more than institutional investors did, regardless of how great the company is. We paid a 14.5% premium for our Desktop Metal shares ($11.45 per share cost basis) which was too much frankly. Why should we be having to pay a premium at all? We’re not buying Markforged shares at a premium of 27%, no matter how great the company is.


We can’t blame any founder for deciding to make hay while the SPAC sun shines, but they do a disservice to long-term investors who don’t want the volatility associated with SPACs. To be fair, the hype that affects SPACs also affects IPOs, but there’s still the information problem. If we had a proper S-1 for Markforged and Desktop Metal, we could have made an informed decision as to which company we’d prefer to hold. Sure, we could hold both, but we’re more interested in the company that presents the least amount of risk. When these companies start producing some 10-Qs and 10-Ks, then we’ll be able to better compare them to make sure we’re holding the best one.

The SPAC deal is expected to close in the summer of 2021, after which time, shares will trade under the ticker “MKFG.”

We’re presently holding Desktop Metal as one of three 3D printing stocks in our portfolio. Want to see the rest? Become a Nanalyze Premium subscriber and find out today.


Leave a Reply

Your email address will not be published.

  1. I got in at $12.6 a couple of hours after the merger announcement. I got a bonus as the same article mentioned Berkshire Grey which I have coveted for sometime but never expected to get until it had an IPO and I got in on the after market. Now that I have bragged about my purchase price I will discuss XONE. I owned this a few years ago but it went nowhere. Then it took off this year and went over $50/share. I thought it was being run up by the reddit crowd but when I checked it out it is booming due to its bigger volume machines using forging heat instead of lazers. I am down $16 since the buy but I am staying in. I believe that 3D printing is going to finally take off. From what I have read when 5G is more prevalent then all the controllers and software will be going to the cloud. That will allow these companies to sell plug and use machines and the cloud will deliver design and go software as a service. This should really drive the industry once you can rent a software program for a huge selection of products and designs and just input your dimension variables for what you want.

  2. @Stan, we also invested in DM and then trimmed shares as they soared over 100% in just days. It’s a great example of why SPACs don’t help you sleep well at night. If DM goes to $5 a share and the story hasn’t changed, and you’re not willing to invest more in it as a buying opportunity, then you shouldn’t be in it.

    We’re definitely going to take another look at both companies – a proper comparison – once we have some decent SEC filings to look at.

  3. @Jim, Markforged looks decent and you paid a 26% premium over what institutions paid, so not horribly bad. The next SPAC on our list to look at is Berkshire Grey. Really hoping they have revenues otherwise we’re not going to have many good things to say. Just remember, nothing says they were fairly priced at $10 a share in the first place.

    As for XONE, we also had shares for a long time and sold them after seeing the company going nowhere fast. Regarding today’s run up, that probably has more to do with the large ownership position ARK has. Take a look at our piece on DM where they don’t even acknowledge XONE’s existence. Why is that?


    We may take an updated look at XONE once we catch up on all our SPACs.

    Interesting connection between 5G and 3D printing but you shouldn’t need 5G to do that. We already have manufacturing in the cloud (Protolab) and while 5G will be great for digital twins, we should have what we need today for 3D printing to experience widespread adoption as just one tool in a “manufacturing on demand” platform.

  4. Cost, Expertese, and quick design changes. I had a CNC router shop (wood carvings) 20 years ago. I used an intuitive color based design software named “Art Cam”. Not cheap $7500 plus yearly updates. I was fair after a lot of work but everyone was looking for canned designs on the internet. When I shut it down the only inquiries I got were from shops in China and India that were using my designs. Plus the controller sold with the machine added a lot of cost and complexity. Being able to rent a software, have ready access to a cloudbase sofware packages with canned parts and designs, plus being able to buy a machine without a controller (which you can plug and play) and get rapid access to the software for protyping IMO is going to drive this industry. I hope. I don’t know anyone who has made much money in the 3d printing business. I now own DM, AONE, and XONE. I now have 11 SPACS, most have viable businesses which will have to grow to keep everyone happy, and as for the institutions coming in thru the PIPE I do look at them closely. They all get the $10 price but in all fairness they have a lot more connection than I have.

    1. Thanks for the interesting story Jim! Looks like you’re getting closer to that $10 price these days. Just remember man, there’s nothing that says the price institutions paid ($10 roughly) was a good valuation to begin with. That said, you’re a premium subscriber so you’ll know what SPAC we opened a small position in last week 🙂 Only one of two SPACs we’re holding.