Velo3D and Desktop Metal Announce Reverse Stock Splits; while Shapeways Divests Software Assets

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The additive manufacturing (AM) industry continues to struggle as far as the public markets are concerned. Both Velo3D, Inc. (NYSE: VLD) and Desktop Metal, Inc. (NYSE: DM) announced reverse stock splits, while Shapeways Holdings, Inc. (NASDAQ: SHPW) divested its software assets.

Velo3D’s 1-for-35 Reverse Stock Split

Velo3D, a key developer of laser powder bed fusion for metal 3D printing, has announced a 1-for-35 reverse stock split of its common stock. The stock opened for trading on a split-adjusted basis on the New York Stock Exchange (NYSE) starting June 13, 2024. This move is intended to help Velo3D regain compliance with the NYSE’s minimum share price requirement.

The reverse stock split, approved by stockholders on June 10, 2024, and finalized by the board of directors on the same day, will automatically convert 35 current shares into one new share. This will reduce the number of outstanding shares from approximately 297 million to about 8.5 million. Adjustments will be made to the exercise prices of Velo3D’s outstanding stock options and warrants, and fractional shares will be rounded up to the nearest whole share.

Continental Stock Transfer & Trust Company will act as the transfer agent, ensuring that stockholders holding shares electronically or through brokers will see their positions adjusted automatically.

Desktop Metal’s 1-for-10 Reverse Stock Split

Desktop Metal, another prominent player in AM, has announced a 1-for-10 reverse stock split of its Class A common stock. This split became effective at the close of trading on June 10, 2024, with the stock trading on a split-adjusted basis starting June 11, 2024. As with Velo3D, the primary goal was to meet the NYSE’s listing requirements by increasing the per-share market price.

Every 10 shares of Desktop Metal’s Class A common stock will be reclassified into one new share, with proportionate adjustments made to equity awards. No fractional shares will be issued; stockholders entitled to fractional shares will receive cash payments based on the adjusted closing price on June 10, 2024. Also managing this process is Continental Stock Transfer & Trust, ensuring automatic adjustments for electronically held shares.

Shapeways Sells Software Assets

AM service bureau Shapeways Holdings entered into an agreement to sell its software business to OTTO dms, Inc., an entity wholly-owned by Shapeways’ CEO Greg Kress and software unit executive Greg Rothman. The transaction involved selling OTTO and MFG assets but excludes Shapeways’ proprietary InShape software.

This decision follows a strategic review and competitive process overseen by a Special Committee of Shapeways’ Board of Directors. Post-transaction, Greg Kress will remain CEO of Shapeways, while Greg Rothman will lead the independent software business. Shapeways continues to explore strategic alternatives for its manufacturing business and is in discussions with potential buyers.

Reverse stock splits, while typically not viewed favorably, are an expected outcome for companies that trade so low on the market. It’s not the first time that this has happened in the 3D printing industry, nor will it likely be the last, given the fact that Markforged is also trading below $1.00 per share.

Somewhat more surprising is that Shapeways sold its software division to what is essentially itself, or at least its own management. This raises concerns about potential conflicts of interest and the thoroughness of the sale process. Although the transaction was approved by the Special Committee and Board of Directors, the involvement of current executives as buyers can be perceived skeptically. The press release indicates that market checks showed interest in acquiring either the manufacturing or software business, leading to the decision to sell the software business. However, the lack of detailed transparency about the competitive process and other offers received may question the fairness of the sale.

All of this suggests that times are still tough for publicly traded AM companies and that the hardships aren’t over. These companies, all of which IPO’d during the SPAC craze of 2020-2021, are now struggling to maintain their market listings and making choice that will be critically appraised by investors and the public. Given the overall value of AM technology, one can only imagine that the tide is about to turn for the larger AM sector, if it hasn’t begun to do so already. What that means for devalued public firms, however, is a different issue altogether.

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