Velo3D Stock Rises on $32.6M US Defense Department Contract
The contract for advanced metal 3D printing aims to resolve critical manufacturing bottlenecks and represents over 60% of the company's annual revenue.
Shares of Velo3D, Inc. (NASDAQ: VELO) saw significant trading activity after the company announced it secured a $32.6 million contract from the U.S. Department of Defense. The deal, aimed at leveraging the company's advanced 3D printing technology to ease production bottlenecks for the defense industry, marks a significant financial and strategic victory for the small-cap firm.
The contract was awarded by the DoD's Defense Innovation Unit (DIU) as part of an initiative dubbed "Project FORGE." Velo3D will use its sophisticated metal additive manufacturing (AM) technology to prototype and qualify mission-critical metal parts, with the goal of increasing production rates for a key Department of War weapon system. For Velo3D, a company with approximately $49 million in trailing-twelve-month revenue, the $32.6 million award represents a massive infusion of capital and a powerful validation of its technology.
"As the only U.S.-based industrial-scale OEM with domestically developed Laser Powder-Bed Fusion technology, Velo3D is absolutely honored for the opportunity to collaborate with the DoW, DIU, and the Navy to ultimately deliver a solution that supports the warfighter," said Dr. Arun Jeldi, CEO of Velo3D, in a statement announcing the deal. "Through our Rapid Production Solution, we are providing faster part delivery, enhanced reliability and the surge capacity needed to meet evolving defense demands."
Based in California, Velo3D specializes in Laser Powder Bed Fusion (LPBF) technology, a form of 3D printing that creates complex metal parts by melting and fusing metallic powders layer by layer. This technology is highly valued in sectors like aerospace, energy, and defense, where components must meet extreme performance standards. The company's Sapphire® printers, which are assembled in the United States and comply with DoD cybersecurity standards, can produce parts up to one meter in height.
The initial news of the contract sent the company's stock higher, as reported by market publications. The stock has seen extreme volatility over the past year, trading in a wide range between $1.43 and $28.50. This contract provides a significant pillar of revenue visibility and de-risks near-term financial uncertainty, which has been a concern for investors in the pre-profitability technology sector.
The agreement with the DIU also includes an option to develop the largest format LPBF printing capability within the U.S., signaling a deeper potential partnership and a strategic push to onshore critical manufacturing capabilities for the nation's defense industrial base. By using additive manufacturing, the DoD aims to shorten lengthy procurement cycles for components that often rely on casting, which can take many months to deliver.
For Velo3D, which has a market capitalization of just over $100 million, the contract is a transformative event. It not only provides a substantial revenue stream but also cements its role as a key government partner in a high-priority sector. This validation could unlock further opportunities within the defense industry and attract new commercial clients who see the DoD's adoption as a powerful endorsement of Velo3D's advanced manufacturing platform.