🚀 The Truth About ARK Invest's 3D Printing ETF (PRNT) - YouTube

The idea behind Ticker Symbol YOU is simple: connect the dots between advanced technologies

and stock market data to highlight the best investment opportunities among the companies

that are transforming our daily lives. I've greatly increased my own returns - and lowered

my stress - by using data to drive my decisions about investing and what content to create,

instead of my gut. Here's the thing. This week, Ticker Symbol: YOU turns one year old,

so I'd like to talk about an area of disruptive innovation that I don't cover very often,

explain why I don't cover it, and then show you what I think is the best way to invest

in this space. Your time is valuable, so let's get right into it.

When you think about 3D printing, you're probably thinking about small, low-resolution, home

3D printers. The thing is, 3D printing isn't about any one specific product. It's a process.

It's about turning your vision into a reality, one layer at a time. It doesn't matter how

complex or precise or strange the design. There are almost no limits when it comes to

the materials that 3D printers can use... and there are almost no limits when it comes

to scale. In the future, I think we will be able to 3D print an entire house. Not just

a house, what about entire 3D printed communities, that are laid out in advance like 3D printed

circuit boards? That's a pretty exciting idea. Because there are almost no limits to the

designs or the materials, there are almost no limits to the 3D printing process itself,

besides cost, time, and the human imagination. And for a long time that's why 3D printing

has captured my imagination as an engineer, a passionate nerd, and an investor. [disc

scratch]

BUT. Like I said earlier, capturing the imagination isn't the same thing as capturing returns.

If I take a step back from my gut feelings and just look at the data, it appears that

3D printing is not the investment opportunity I really want it to be. Let's consider the

year-to-date stock price charts of four of my favorite pure-play 3D printing companies:

Desktop Metal, ticker symbol D M, Proto Labs, P R L B, Nano Dimension, N N D M, and Materialise,

ticker symbol M T L S. I really believe these are strong 3D printing companies and serious

innovators. They're all down at least 40% since the start of the year, while the S and

P 500 has gained over 20% in the same period. But wait a minute, doesn't that mean these

are great stocks that are trading at a steep discount, and now is a great time to buy them?

After all, they help make parts that can't be made any other way and ARK Invest has hundreds

of millions of dollars invested in these companies across multiple funds. Forget that, ARK Invest

even has a fund dedicated to 3D printing! So, how come I never talk about that fund

on this channel? What gives?

Let me explain. A little while ago, ARK Invest filed to create a bitcoin exchange-traded

fund called ARKB. That ETF’s investment objective would be to track the performance

of bitcoin. Cathie Wood often says that she sees a future where bitcoin is part of a balanced

investment portfolio and on the balance sheet of many corporations, so having this product

would grant investors exposure to the price action of bitcoin without the friction of

buying bitcoin directly. Holding ARKB is like holding a stock that moves with the price

of Bitcoin. That's useful for sure, but there would be no trades for me to cover so I wouldn't

cover ARKB on this channel, right? The same is true for ARK Invest's 3D printing fund,

ticker symbol P R N T, or "Print". PRINT seeks to provide investment results that closely

correspond to the performance of the Total 3D-Printing Index, which is designed to track

the price movements of stocks involved in the 3D printing industry. It's a passively-managed

index fund that's rebalanced quarterly, so there are no daily trades or weight changes

to track. Here's what's inside ARK Invest's PRNT fund as of October 25th, 2021.

The biggest holding is Hewlett-Packard, ticker symbol H P Q, with about a 4.13% weighting

in the fund. Nano Dimensions, ticker symbol N N D M, has almost the same weighting at

3.66%, even though it's the 21st biggest holding in the fund. Here are the four stocks I mentioned

earlier, Materialise, Proto Labs, Desktop Metal, and Nano Dimension, and their respective

positions inside the fund. It means nothing to be in the top 10 holdings of this fund

since every holding has basically just one of three weights, 3.8-ish percent, 1.1-ish

percent, or 0.1-ish percent. If you use an online service that tracks ARK Invest's combined

positions, make sure that service does NOT include the holdings inside of this 3D Printing

fund, since it's not managed the same way. If you're one of my Patrons on Patreon or

channel members right here on YouTube who track ARK Invest's daily holdings via my online

dashboards, like the ones in this episode, you're all set because I don't count this

fund. I made these visualizations of the Print fund for this episode, specifically.

When I first started this channel a year ago, I told myself that I would never waste my

time, or yours. But mostly mine. One way I do that is by using data to carefully choose

what to cover in the first place. In my opinion, passive index funds aren't worth covering

because no one is actually making investment decisions to maintain them and those investment

decisions are actually responsible for a significant portion of ARK Invest's out-performance. One

of my favorite sayings is: When in doubt, zoom out. Here's what I mean. If you look

ARKK and ARKG, they've returned hundreds of percentage points ABOVE the S&P 500 to shareholders

over the last 5 years. Print has returned 76% over that same time period, which is definitely

nothing to sneeze at, but the S&P 500 returned over 30% more than that. And that makes sense

because the goal of these kinds of index funds isn't to give investors great returns. They're

financial instruments that very closely track something specific in the markets. If you

look at ARKF, which only started trading less than 3 years ago, it's still returned over

50% more than either of these indexes in only 60% of the time. That's the power of ARK Invest's

research, stock picks, and active management, which is what caused me to make this channel

in the first place.

Great. That's enough about why I don't cover this passive 3D printing index fund. Let's

talk about these cheap 3D printing stocks, themselves. I strongly believe that 3D printing

is a core part of our future. My only question is when. Are we talking 2 years out? 5 years

out? A decade? In my mind, the big risk of buying these stocks today is the opportunity

cost or the risk that they could stay down and lock up our money in the process. That's

money that could have been invested in Tesla or Palantir or any number of other big winners.

So what are the best investments you can make in the 3D printing space? For that, let's

turn to ARK Invest's 2021 Big Ideas report. There are 3 types of applications of 3D printing:

prototypes, molds and tools, and end-use parts. When it comes to making prototypes, 3D printing

has penetrated 40 to 50% of the market, so it's crossed the tipping point and reached

mass adoption. The problem is, that's only a 12.5 billion dollar market. That's actually

fairly small. 3D printing has just a 4% market penetration for making molds and tools, which

is more than twice as big of a market. The ultimate market for 3D printing is end-use

parts, which is more than ten times bigger than the markets for prototypes and molds

and tools put together. However, 3D printing has only penetrated 1% of this $490 billion

dollar market so far.

ARK Invest also breaks down 3D printing applications by industry, and the biggest opportunities

appear to be in space, aerospace, auto parts, and machinery. For things like drones, 3D

printing unlocks parts and form factors that couldn't be made by any other process. ARK

Invest estimates that drone hardware revenues will total around 100 billion dollars by 2025.

In Big Ideas reports from previous years, ARK Invest shared a case study where General

Electric 3D printed parts for jet engines. By reducing the part count from 855 to just

12, these jet engine parts can be made twice as fast, have far fewer points of failure,

and weigh 5% less. That weight reduction ends up lowering fuel burn by 20%, so it's a big

deal. All of that is super important for orbital and suborbital space applications, where failures

are much harder to manage, not to mention it still costs something like $2500 dollars

per pound to get mass up there in the first place. All this talk about space, planes,

and drones is why I think the 3D printing fund is the 2nd largest holding in ARKX, ARK

Invest's newest actively managed fund themed around space exploration. These kinds of companies

are the biggest beneficiaries of advances in 3D printing and where I would invest as

a result. So let me give you my favorites.

Rocket Lab, ticker symbol R K L B, completed their merger with the special purpose acquisition

company Vector Acquisition in August 2021. Rocket Lab is the leader in the small-launch

marketplace, with its Electron rocket carrying around 105 satellites to space since its first

orbital launch three years ago, so it's not a paper rocket company. These guys are flying.

Rocket Lab's Electron rocket is powered by their almost entirely 3D-printed engines,

called the Rutherford, which is also the world's first battery-powered rocket engine. This

Rutherford engine is the first to use 3D printing for all of its primary components, including

everything from its engine chamber to its pumps, main propellant valves, and injector.

3D printing has allowed Rocket Lab’s team of engineers to manufacture an engine that

is very lightweight, as well as greatly reducing the required build time, just like ARK Invest's

research suggests. Although Rocket Lab's costs to launch mass into orbit are much higher

than SpaceX's today, they're currently working to make their Electron rockets reusable. Currently,

their engine has the ability to be 3D printed in just a few days' time, making it much quicker

for companies looking to launch small payloads into Earth’s orbit. When it comes to proving

out the power of 3D printing for space launch vehicles, Rocket Lab is leading the pack.

Next up, we have Joby Aviation, ticker symbol J O B Y, which completed their merger with

the SPAC Reinvent Technology Partners this past August as well. Joby is an electric vertical

take-off and landing aircraft company aiming to revolutionize the emerging air taxi market.

Uber is an investor and partner of Joby. In a deal late last year, Uber raised its investment

in the startup to $125 million dollars and sold its air taxi enterprise Uber Elevate

to Joby Aviation. Of the major eVTOL players, Joby is one of the furthest along in terms

of FAA certification for flight worthiness. They are also the first organization in history

to attempt certification of multiple safety-critical structural titanium components made by 3D

printing. One of the chief obstacles to certifying safety-critical additive parts is that most

3D printers are intended for prototyping, not the highly controlled production and file

protection you need for passenger aircraft. To overcome this challenge, Joby partnered

with Dassault Systemes, to develop an immutable filetype similar to the solutions used in

the financial technology space. This means that once a design file is exported, it can't

be changed - an important part of maintaining certification. This filetype also adds some

advantages for the 3D printing laser technologies that Joby uses by providing extra controls

and rules on how the laser moves while making parts. Joby's goal with this collaboration

is to allow 3D-printed parts to be more auditable in the present and to have a filetype that

supports new requirements for certification in the future.

And that brings us to their partner in this effort, Dassault Systemes, ticker symbol D

S Y, which is the maker of Solidworks and a number of other software applications for

3D modeling, simulations, creating digital twins of products and production systems,

and a lot more. I've used SolidWorks all throughout my time as an engineering student and my personal

experience is that Dassault is an awesome software company. That's actually one of their

biggest moats - engineers get trained on their software solutions early on in their careers

and stick with them. They have deep roots in the aviation space but support a wide variety

of manufacturing sectors, as well as life sciences and healthcare, which are two other

industries that benefit from 3D printing. One of the most important benefits of 3D printing

is that you can create highly complex geometries that aren't possible by other manufacturing

processes, which means Dassault's software packages need to be able to support these

types of geometries and the various sets of instructions for the 3D printers they interface

with as well.

Last but not least, we have the only SPAC on the list. Fast Radius is a cloud manufacturing

and digital supply chain company that focuses on building infrastructure to design, make,

and move things in the digital age. They have a software platform called the Cloud Manufacturing

Platform, that lets people design and get feedback on parts before getting them made.

The software supports digital simulations of materials and structures as well as collaborative

design. Once the design is finalized, you can store it inside a Virtual Warehouse, where

it is waiting to be ordered before it's made, meaning companies and individuals no longer

need to store physical inventories. The part is made by 3D printing when it is demanded,

not before. The parts are 3D printed at a Fast Radius Microfactory, which are highly

scalable units that act as “factories in a box." Fast Radius is using 3D printing to

solve the current problems associated with centralized mega-factories, slow-moving and

easily disrupted supply chains, as well as the massive amount of space it takes to store

physical goods, especially if they have many variants. Fast Radius is one of the SPACs

that Palantir has invested in and given access to their Foundry Platform. I think Fast Radius

will rely on Palantir to help with the optimization of everything from individual part design

to production to fulfillment. Fast Radius will be merging with ECP Environmental Growth

Opportunities Corp, ticker symbol E N N V later this year.

So, there you have it. Four great stocks that are not pure-play 3D printing companies, but

still rely on 3D printing to tackle important challenges in space and in the sky, as well

as across every step of production here on the ground, from design to fulfillment. Keep

in mind that all of these companies are focused on changing the world in the long term, but

in my opinion, these kinds of beneficiaries are the best way to get exposure to the constant

innovations being made in 3D printing today. Comment below or tweet me at Ticker Symbol

YOU with your thoughts on 3D printing in the short, medium, and long term. What do you

think will be the next major catalyst for 3D printing companies? Do you prefer pure-play

3D printing stocks or beneficiaries like the ones I talked about? I'm excited to hear your

thoughts.

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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

invest in advanced technology, no problem. You can follow along with my $100,000 dollar

portfolio project, which I'm kicking off once this channel hits 100,000 subscribers. I'm

building that portfolio from scratch to compete directly with ARKK, ARK Invest's flagship

innovation fund, which is actively managed by Cathie Wood and holds some of the very

best advanced technology stocks on the market. If you're interested in jumping on that wild

ride with me, consider liking this video and subscribing to the channel with all notifications

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this, as well as exactly what I'm putting in that portfolio each month. Thanks for watching

and until next time, this is Ticker Symbol You. My name is Alex, reminding you that the

best investment you can make... is in you.