Xometry Stock: Down 65%, Supply Chain Play Could Double

Xometry Inc Represents the Future of Manufacturing & Supply Industry

Global supply chain disruptions continue to hurt the manufacturing industry worldwide. From the sourcing of raw materials to producing end products, it’s been a challenge.

Xometry Inc (NASDAQ:XMTR) is an interesting play on the third-party manufacturing sector. Xometry isn’t directly involved in the manufacturing process. Instead, it operates a platform that connects product developers to third-party manufacturers.

Xometry Inc uses artificial intelligence to help innovators get their products manufactured on a contract basis.

Xometry’s clients range from small enterprises to Fortune 100 companies in North America, Europe, and Asia. The company’s clients operate in a diverse range of fields, including aerospace and defense; automotive; consumer products; design services; medical devices; education; electronics and semiconductors; and energy. (Source: “Investor Relations,” Xometry Inc, last accessed June 3, 2022.)

Xometry’s revenues have been ratcheting higher. The company grew its revenues by 172% from $80.2 million in 2019 to a record $218.3 million in 2021. Analysts expect that growth to continue at 82.2% to $397.9 million in 2022 and at 37.5% to $547.0 million in 2023. (Source: “Xometry, Inc. (XMTR),” Yahoo! Finance, last accessed June 3, 2022.)

XMTR Stock Attractive After Major Sell-Off

Xometry Inc priced its initial public offering (IPO) at $44.00 in June 2021. Xometry stock opened at $68.00 on its first day of trading and reached a high of $97.57 in the initial session.

Unfortunately for early investors, the buying faded and XMTR stock tested a low of $26.61 on May 12, 2022 prior to rallying to the current $33.52.

Chart courtesy of StockCharts.com

So, while the initial thrust was clearly excessive (as was the case with many technology stocks in 2021), the subsequent pullback to below the IPO price presents a contrarian investment opportunity.

Why Xometry Stock’s Price Could Double

Xometry Inc’s stock chart shows significant price deterioration, as XMTR stock failed to attract any support on its way down.

XMTR stock mounted several attempts to halt the slide but failed each time. But at its current lows, Xometry stock has a strong risk/reward trade-off if the stock can establish a base and then rally.

A plus is that shares of Xometry Inc have rallied and are just below their 50-day moving average of $34.89. If XMTR stock can take out this level, it could make a move toward its 200-day moving average at $48.37.

Chart courtesy of StockCharts.com

A look at the horizontal Fibonacci retracement levels on the above chart (the horizontal blue lines in the middle) point to technical targets at $50.30, $57.38, and $64.46.

Analyst Take

While shares of Xometry Inc have been sold off, Xometry stock continues to attract strong institutional buying, with 165 institutions holding a 93.3% stake in XMTR stock. (Source: Yahoo! Finance, op. cit.)

And with the major decline, Xometry Inc has seen its valuation improve to around 2.8 times its consensus 2023 revenue estimate, which is attractive in this market.

Xometry stock looks like a bargain at its current level, especially given the demand for global supply chain and manufacturing solutions.