Recent 3D printer IPO surges 35% in one day

When we write about investing in 3D printer stocks, we almost always are talking about 3D Systems (DDD) and Stratasys (SSYS), the two largest 3D companies in the world. And they are the only two public companies that have a high enough number of shares traded to provide enough liquidity to invest with a measure of safety. There’s also Organovo (ONVO), but that’s a microcap, specialty 3D printer company.

But, yesterday another 3D printer stock hit the limelight, and it rose about 35% by the end of the day, from an open of $12.47 to a close of $16.85. The company is Arcam AB (AMAVF), a Swedish manufacturer of high-end, specialty 3D printers that print in metal. I have to admit that I completely missed this recent summer IPO until I saw yesterday’s Seeking Alpha article, Is there An Undervalued 3D printer Manufacturer? Yes, Arcam AB, that brought it to the attention of investors and caused the stock to skyrocket.

How can one article, particularly just a Seeking Alpha article (where nearly anyone can post an article), cause a stock to move so much so quickly? Because ARCAM is a small company, with small market capitalization (a microcap stock), and a very small share float. Its market cap is only about $60 million and the float is only two million shares, with a very low trading volume. In fact, until yesterday, it’s average daily volume has been only about an itsy bitsy 600 shares a day, and looking at the recent history there are more days when no shares are traded than when there are shares traded; yesterday saw a volume of 33,000 shares traded. So any higher than average interest in the stock will cause a an outsized gain — it’s just supply and demand.

The company sports a significantly lower Price-to-Earnings ratio and Price-to-Sales ratio than either DDD or SSYS, a higher Return on Equity, is profitable and has no debt. That all very good, but it doesn’t make it a better stock than the other two. However, it does make it a very interesting stock that is worth taking a look at.

Arcam has been in business since 1997, and has about 60 installations throughout the world. The very expensive systems are predominantly used in aerospace/defense and medical implant applications. The printers use what they call “Electron Beam Melting” (EBM) technology, patent-protected in 24 countries, to print in metals such as Titanium (TI) and Cobalt Chromium (CoCr). In the EBM process, the electron beam melts metal powder, layer-by-layer, to build the physical object. The Arcam EBM machines are capable of producing multiple parts in the same build. Arcam has two main metal-sintering machine systems: the A1 for smaller applications, and the A2 for larger ones. A quick look at their partial customer list shows names such as NASA, NC State University and Airbus.

Arcam is listed on NASDAQ OMX Stockholm, Sweden, however, you can purchase it in the U.S. under the symbol AMAVF.

Please keep in mind that investing in microcap companies like this one can be extremely risky, and this article is not a recommendation to purchase the stock.

Disclosure: I purchased some shares early this morning at around $15.27, after investors took some profits from yesterday’s gains. I also own shares of DDD, SSYS and ONVO.