Velo3D Inc (NASDAQ: VELO) has experienced a significant surge in its stock price, reaching new 52-week highs after unveiling a strategic collaboration with the U.S. Army. This agreement is designed to enhance the development and qualification of complex components produced through additive manufacturing techniques, a move that could bolster military supply chains.
The company's shares jumped by more than 10% following the announcement but later relinquished some of the gains. At one point during Tuesday’s trading session, the stock hit its highest level in a year, reflecting investor enthusiasm about Velo3D's expanding role in defense manufacturing.
Details of the U.S. Army Partnership
Velo3D entered into a Cooperative Research and Development Agreement (CRADA) with the U.S. Army’s DEVCOM Ground Vehicle Systems Center. The collaboration aims to accelerate the production and certification process for additively manufactured parts and assemblies specifically designed for ground combat vehicles and associated military platforms.
This initiative directly addresses ongoing supply chain issues impacting the military’s ground vehicle operations. By developing prototype parts through advanced additive manufacturing methods, Velo3D seeks to integrate its solutions seamlessly into the Army’s supply chain upon successful validation.
Arun Jeldi, Velo3D's CEO, emphasized the company's unique position, stating that it is the first U.S.-based original equipment manufacturer (OEM) at an industrial scale with domestically developed Laser Powder-Bed Fusion additive manufacturing technology tailored to meet the U.S. Army's ground vehicle supply needs. Jeldi highlighted that Velo3D’s Rapid Production Solution offers benefits such as accelerated part delivery, improved reliability, and the surge capacity required to meet the dynamic demands of defense operations.
Technical Performance and Market Indicators
The stock’s price is exhibiting remarkable strength, trading approximately 48.9% above its 20-day simple moving average (SMA) and a substantial 227.1% above its 100-day SMA. Over the last twelve months, the shares have appreciated by over 551%, placing them significantly closer to their 52-week highs than lows and underscoring robust upward momentum.
However, technical indicators present a nuanced picture. The Relative Strength Index (RSI) stands at 74.02, signaling that the stock currently resides in overbought territory. Typically, an overbought RSI can suggest that the stock price may be due for a pullback or correction in the near term.
Complementing this, the Moving Average Convergence Divergence (MACD) indicator remains above its signal line, reinforcing a bullish outlook. The combination of an overbought RSI and a bullish MACD indicates strong momentum but simultaneously suggests that investors should be cautious about potential short-term volatility.
Key resistance for the stock is identified at $24.00, with a support level around $22.00, which market participants may watch closely for guidance on price movements.
Benzinga Edge Ratings and Valuation Concerns
Benzinga Edge’s evaluation of Velo3D classifies the company as a high-flyer with areas of strength and caution. The momentum score is a robust 83 out of 100, reflecting its strong performance compared to the broader market.
From a quality perspective, Velo3D scores a solid 66, indicating a healthy balance sheet consistent with financial stability. Nevertheless, the value score is notably low at 4 out of 100, pointing to a significant premium in valuation relative to industry peers, which elevates investment risk.
Price Volatility and Market Reaction
Following the announcement, Velo3D's shares demonstrated volatility, initially rising sharply before moderating. At the time of writing, the stock was trading modestly lower by approximately 1.63% at $21.73. Such fluctuations underscore the stock’s susceptibility to rapid changes in investor sentiment.
Summary and Outlook
Velo3D’s strategic partnership with the U.S. Army to advance additive manufacturing for military ground vehicles has catalyzed a notable rally in its stock price, reaching new annual highs. The company’s advanced technology offerings present opportunities to enhance military supply chains by delivering complex parts with improved speed and reliability.
Despite the positive momentum, technical indicators and valuation metrics suggest investors should remain vigilant regarding potential pullbacks and the premium price level at which the stock trades. Continuous monitoring of supply chain developments, prototype integration success, and stock price dynamics will be essential for assessing the company's trajectory.