Why Velo3D Stock Skyrocketed Today
What happened
Velo3D (NYSE: VLD) stock saw explosive gains in Firday's trading. The company's share price closed out the daily session up 24.8%, according to data from S&P Global Market Intelligence.
While Velo3D stock experienced big sell-offs earlier in the week on news that its chief financial officer (CFO) would be departing, it surged today thanks to support from a high-profile investor. The latest updates published by CEO Cathie Wood's Ark Invest showed that the firm had purchased $1.8 million worth of Velo3D shares, and the 3D-printing specialist's stock popped Friday on the development.
So what
Velo3D stock has seen volatile swings this week. The company published a press release after the market closed on Tuesday announcing that its CFO William McCombe would be resigning at the end of the week. The unexpected management shakeup initially prompted a stark pullback for the company's share price, but it bounced back Friday following news that Ark Invest has been buying shares.
Now what
Even with the recent pop, Velo3D's share price is still down roughly 12% year to date. For risk-tolerant investors, the company could be looking cheap on a price-to-sales basis.
VLD PS Ratio (Forward) data by YCharts.
Trading at less than 2.9 times this year's expected sales, Velo3D could have explosive upside. But investors should proceed with the understanding that it's a high-risk, high-reward stock.
Adoption for 3D-printing technologies has generally proceeded at an uneven pace. It's possible that demand for Velo3D's services will see a dramatic upswing over the long term, but the company's business trajectory remains difficult to model. Still, there are some potentially promising indicators here.
In addition to recent investment support from Cathie Wood, Velo3D counts Tesla CEO Elon Musk's SpaceX business, Honeywell, and Lockheed Martin as clients. While the 3D-printing player's performance outlook remains speculative, support from high-profile players is an encouraging sign.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Lockheed Martin and Velo3D. The Motley Fool has a disclosure policy.
