DM - Desktop Metal Stock Craters 61% -- Earnings Were Not the Main Cause
Desktop Metal (NYSE: DM) stock closed down a whopping 61.1% on Tuesday following the 3D printing company's release of its first-quarter results before the market open. The stock was already in the risky "penny stock" category -- that is, priced below $5 per share -- before the earnings release. It's now even deeper in penny stock territory, as it closed at $1.33 per share on Tuesday.
It's probably safe to assume that neither the quarter's revenue nor earnings were among the main reasons for investors' ire. The top line beat Wall Street's consensus estimate, and the bottom line fell only slightly short of analysts' expectations.
There are two main reasons, in my opinion, why investors furiously dumped the stock. First, the company continued to burn through cash at a fast and unsustainable rate, so investors are concerned about its liquidity. Second, investors are getting increasingly concerned about how the flagship P-50 production system is being received in the marketplace.
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Desktop Metal Stock Craters 61% -- Earnings Were Not the Main Cause