🚀 The Truth About ARK Invest’s 3D Printing ETF (PRNT)

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The idea behind Ticker Symbol YOU is simple: connect the dots between advanced technologies
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and stock market data to highlight the best investment opportunities among the companies
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that are transforming our daily lives. I've greatly increased my own returns – and lowered
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my stress – by using data to drive my decisions about investing and what content to create,
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instead of my gut. Here's the thing. This week, Ticker Symbol: YOU turns one year old,
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so I'd like to talk about an area of disruptive innovation that I don't cover very often,
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explain why I don't cover it, and then show you what I think is the best way to invest
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in this space. Your time is valuable, so let's get right into it.
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When you think about 3D printing, you're probably thinking about small, low-resolution, home
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3D printers. The thing is, 3D printing isn't about any one specific product. It's a process.
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It's about turning your vision into a reality, one layer at a time. It doesn't matter how
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complex or precise or strange the design. There are almost no limits when it comes to
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the materials that 3D printers can use… and there are almost no limits when it comes
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to scale. In the future, I think we will be able to 3D print an entire house. Not just
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a house, what about entire 3D printed communities, that are laid out in advance like 3D printed
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circuit boards? That's a pretty exciting idea. Because there are almost no limits to the
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designs or the materials, there are almost no limits to the 3D printing process itself,
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besides cost, time, and the human imagination. And for a long time that's why 3D printing
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has captured my imagination as an engineer, a passionate nerd, and an investor. [disc
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scratch]
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BUT. Like I said earlier, capturing the imagination isn't the same thing as capturing returns.
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If I take a step back from my gut feelings and just look at the data, it appears that
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3D printing is not the investment opportunity I really want it to be. Let's consider the
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year-to-date stock price charts of four of my favorite pure-play 3D printing companies:
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Desktop Metal, ticker symbol D M, Proto Labs, P R L B, Nano Dimension, N N D M, and Materialise,
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ticker symbol M T L S. I really believe these are strong 3D printing companies and serious
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innovators. They're all down at least 40% since the start of the year, while the S and
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P 500 has gained over 20% in the same period. But wait a minute, doesn't that mean these
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are great stocks that are trading at a steep discount, and now is a great time to buy them?
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After all, they help make parts that can't be made any other way and ARK Invest has hundreds
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of millions of dollars invested in these companies across multiple funds. Forget that, ARK Invest
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even has a fund dedicated to 3D printing! So, how come I never talk about that fund
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on this channel? What gives?
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Let me explain. A little while ago, ARK Invest filed to create a bitcoin exchange-traded
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fund called ARKB. That ETF’s investment objective would be to track the performance
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of bitcoin. Cathie Wood often says that she sees a future where bitcoin is part of a balanced
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investment portfolio and on the balance sheet of many corporations, so having this product
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would grant investors exposure to the price action of bitcoin without the friction of
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buying bitcoin directly. Holding ARKB is like holding a stock that moves with the price
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of Bitcoin. That's useful for sure, but there would be no trades for me to cover so I wouldn't
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cover ARKB on this channel, right? The same is true for ARK Invest's 3D printing fund,
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ticker symbol P R N T, or “Print”. PRINT seeks to provide investment results that closely
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correspond to the performance of the Total 3D-Printing Index, which is designed to track
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the price movements of stocks involved in the 3D printing industry. It's a passively-managed
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index fund that's rebalanced quarterly, so there are no daily trades or weight changes
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to track. Here's what's inside ARK Invest's PRNT fund as of October 25th, 2021.
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The biggest holding is Hewlett-Packard, ticker symbol H P Q, with about a 4.13% weighting
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in the fund. Nano Dimensions, ticker symbol N N D M, has almost the same weighting at
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3.66%, even though it's the 21st biggest holding in the fund. Here are the four stocks I mentioned
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earlier, Materialise, Proto Labs, Desktop Metal, and Nano Dimension, and their respective
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positions inside the fund. It means nothing to be in the top 10 holdings of this fund
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since every holding has basically just one of three weights, 3.8-ish percent, 1.1-ish
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percent, or 0.1-ish percent. If you use an online service that tracks ARK Invest's combined
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positions, make sure that service does NOT include the holdings inside of this 3D Printing
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fund, since it's not managed the same way. If you're one of my Patrons on Patreon or
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channel members right here on YouTube who track ARK Invest's daily holdings via my online
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dashboards, like the ones in this episode, you're all set because I don't count this
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fund. I made these visualizations of the Print fund for this episode, specifically.
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When I first started this channel a year ago, I told myself that I would never waste my
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time, or yours. But mostly mine. One way I do that is by using data to carefully choose
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what to cover in the first place. In my opinion, passive index funds aren't worth covering
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because no one is actually making investment decisions to maintain them and those investment
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decisions are actually responsible for a significant portion of ARK Invest's out-performance. One
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of my favorite sayings is: When in doubt, zoom out. Here's what I mean. If you look
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ARKK and ARKG, they've returned hundreds of percentage points ABOVE the S&P 500 to shareholders
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over the last 5 years. Print has returned 76% over that same time period, which is definitely
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nothing to sneeze at, but the S&P 500 returned over 30% more than that. And that makes sense
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because the goal of these kinds of index funds isn't to give investors great returns. They're
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financial instruments that very closely track something specific in the markets. If you
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look at ARKF, which only started trading less than 3 years ago, it's still returned over
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50% more than either of these indexes in only 60% of the time. That's the power of ARK Invest's
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research, stock picks, and active management, which is what caused me to make this channel
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in the first place.
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Great. That's enough about why I don't cover this passive 3D printing index fund. Let's
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talk about these cheap 3D printing stocks, themselves. I strongly believe that 3D printing
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is a core part of our future. My only question is when. Are we talking 2 years out? 5 years
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out? A decade? In my mind, the big risk of buying these stocks today is the opportunity
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cost or the risk that they could stay down and lock up our money in the process. That's
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money that could have been invested in Tesla or Palantir or any number of other big winners.
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So what are the best investments you can make in the 3D printing space? For that, let's
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turn to ARK Invest's 2021 Big Ideas report. There are 3 types of applications of 3D printing:
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prototypes, molds and tools, and end-use parts. When it comes to making prototypes, 3D printing
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has penetrated 40 to 50% of the market, so it's crossed the tipping point and reached
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mass adoption. The problem is, that's only a 12.5 billion dollar market. That's actually
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fairly small. 3D printing has just a 4% market penetration for making molds and tools, which
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is more than twice as big of a market. The ultimate market for 3D printing is end-use
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parts, which is more than ten times bigger than the markets for prototypes and molds
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and tools put together. However, 3D printing has only penetrated 1% of this $490 billion
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dollar market so far.
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ARK Invest also breaks down 3D printing applications by industry, and the biggest opportunities
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appear to be in space, aerospace, auto parts, and machinery. For things like drones, 3D
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printing unlocks parts and form factors that couldn't be made by any other process. ARK
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Invest estimates that drone hardware revenues will total around 100 billion dollars by 2025.
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In Big Ideas reports from previous years, ARK Invest shared a case study where General
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Electric 3D printed parts for jet engines. By reducing the part count from 855 to just
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12, these jet engine parts can be made twice as fast, have far fewer points of failure,
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and weigh 5% less. That weight reduction ends up lowering fuel burn by 20%, so it's a big
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deal. All of that is super important for orbital and suborbital space applications, where failures
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are much harder to manage, not to mention it still costs something like $2500 dollars
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per pound to get mass up there in the first place. All this talk about space, planes,
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and drones is why I think the 3D printing fund is the 2nd largest holding in ARKX, ARK
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Invest's newest actively managed fund themed around space exploration. These kinds of companies
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are the biggest beneficiaries of advances in 3D printing and where I would invest as
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a result. So let me give you my favorites.
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Rocket Lab, ticker symbol R K L B, completed their merger with the special purpose acquisition
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company Vector Acquisition in August 2021. Rocket Lab is the leader in the small-launch
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marketplace, with its Electron rocket carrying around 105 satellites to space since its first
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orbital launch three years ago, so it's not a paper rocket company. These guys are flying.
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Rocket Lab's Electron rocket is powered by their almost entirely 3D-printed engines,
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called the Rutherford, which is also the world's first battery-powered rocket engine. This
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Rutherford engine is the first to use 3D printing for all of its primary components, including
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everything from its engine chamber to its pumps, main propellant valves, and injector.
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3D printing has allowed Rocket Lab’s team of engineers to manufacture an engine that
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is very lightweight, as well as greatly reducing the required build time, just like ARK Invest's
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research suggests. Although Rocket Lab's costs to launch mass into orbit are much higher
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than SpaceX's today, they're currently working to make their Electron rockets reusable. Currently,
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their engine has the ability to be 3D printed in just a few days' time, making it much quicker
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for companies looking to launch small payloads into Earth’s orbit. When it comes to proving
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out the power of 3D printing for space launch vehicles, Rocket Lab is leading the pack.
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Next up, we have Joby Aviation, ticker symbol J O B Y, which completed their merger with
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the SPAC Reinvent Technology Partners this past August as well. Joby is an electric vertical
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take-off and landing aircraft company aiming to revolutionize the emerging air taxi market.
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Uber is an investor and partner of Joby. In a deal late last year, Uber raised its investment
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in the startup to $125 million dollars and sold its air taxi enterprise Uber Elevate
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to Joby Aviation. Of the major eVTOL players, Joby is one of the furthest along in terms
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of FAA certification for flight worthiness. They are also the first organization in history
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to attempt certification of multiple safety-critical structural titanium components made by 3D
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printing. One of the chief obstacles to certifying safety-critical additive parts is that most
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3D printers are intended for prototyping, not the highly controlled production and file
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protection you need for passenger aircraft. To overcome this challenge, Joby partnered
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with Dassault Systemes, to develop an immutable filetype similar to the solutions used in
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the financial technology space. This means that once a design file is exported, it can't
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be changed – an important part of maintaining certification. This filetype also adds some
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advantages for the 3D printing laser technologies that Joby uses by providing extra controls
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and rules on how the laser moves while making parts. Joby's goal with this collaboration
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is to allow 3D-printed parts to be more auditable in the present and to have a filetype that
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supports new requirements for certification in the future.
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And that brings us to their partner in this effort, Dassault Systemes, ticker symbol D
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S Y, which is the maker of Solidworks and a number of other software applications for
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3D modeling, simulations, creating digital twins of products and production systems,
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and a lot more. I've used SolidWorks all throughout my time as an engineering student and my personal
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experience is that Dassault is an awesome software company. That's actually one of their
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biggest moats – engineers get trained on their software solutions early on in their careers
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and stick with them. They have deep roots in the aviation space but support a wide variety
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of manufacturing sectors, as well as life sciences and healthcare, which are two other
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industries that benefit from 3D printing. One of the most important benefits of 3D printing
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is that you can create highly complex geometries that aren't possible by other manufacturing
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processes, which means Dassault's software packages need to be able to support these
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types of geometries and the various sets of instructions for the 3D printers they interface
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with as well.
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Last but not least, we have the only SPAC on the list. Fast Radius is a cloud manufacturing
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and digital supply chain company that focuses on building infrastructure to design, make,
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and move things in the digital age. They have a software platform called the Cloud Manufacturing
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Platform, that lets people design and get feedback on parts before getting them made.
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The software supports digital simulations of materials and structures as well as collaborative
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design. Once the design is finalized, you can store it inside a Virtual Warehouse, where
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it is waiting to be ordered before it's made, meaning companies and individuals no longer
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need to store physical inventories. The part is made by 3D printing when it is demanded,
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not before. The parts are 3D printed at a Fast Radius Microfactory, which are highly
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scalable units that act as “factories in a box.” Fast Radius is using 3D printing to
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solve the current problems associated with centralized mega-factories, slow-moving and
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easily disrupted supply chains, as well as the massive amount of space it takes to store
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physical goods, especially if they have many variants. Fast Radius is one of the SPACs
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that Palantir has invested in and given access to their Foundry Platform. I think Fast Radius
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will rely on Palantir to help with the optimization of everything from individual part design
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to production to fulfillment. Fast Radius will be merging with ECP Environmental Growth
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Opportunities Corp, ticker symbol E N N V later this year.
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So, there you have it. Four great stocks that are not pure-play 3D printing companies, but
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still rely on 3D printing to tackle important challenges in space and in the sky, as well
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as across every step of production here on the ground, from design to fulfillment. Keep
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in mind that all of these companies are focused on changing the world in the long term, but
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in my opinion, these kinds of beneficiaries are the best way to get exposure to the constant
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innovations being made in 3D printing today. Comment below or tweet me at Ticker Symbol
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YOU with your thoughts on 3D printing in the short, medium, and long term. What do you
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think will be the next major catalyst for 3D printing companies? Do you prefer pure-play
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3D printing stocks or beneficiaries like the ones I talked about? I'm excited to hear your
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thoughts.
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And if you're looking for a great platform to buy these stocks, consider going with this
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And if that's not up your alley but you still want to keep up to date on the best ways to
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invest in advanced technology, no problem. You can follow along with my $100,000 dollar
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portfolio project, which I'm kicking off once this channel hits 100,000 subscribers. I'm
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building that portfolio from scratch to compete directly with ARKK, ARK Invest's flagship
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innovation fund, which is actively managed by Cathie Wood and holds some of the very
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best advanced technology stocks on the market. If you're interested in jumping on that wild
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ride with me, consider liking this video and subscribing to the channel with all notifications
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turned on. That way, you'll be the first to know when I come out with more coverage like
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this, as well as exactly what I'm putting in that portfolio each month. Thanks for watching
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and until next time, this is Ticker Symbol You. My name is Alex, reminding you that the
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best investment you can make… is in you.