Velo3D Inc. (VELO) shares extended their decline for a fourth consecutive session on Thursday after short-seller Morpheus Research published a report alleging the company overstated its relationship with Space Exploration Technologies Corp. (SpaceX). The report alleged that Velo3D's relationship with SpaceX "largely ended years ago," citing interviews with former employees who stated SpaceX has not purchased a new Velo3D printer since 2022. The short-seller also questioned Velo3D's defense and aerospace pipeline, arguing it is filled with "highly speculative" deals unlikely to generate meaningful revenue. Velo3D shares fell nearly 10% in Thursday morning trade before recovering partially to hover 5% lower. The stock is up 24% year-to-date and 126% over the past 12 months.
Morpheus Research Alleges SpaceX Relationship Largely Ended Years Ago
Morpheus Research alleged that Velo3D has promoted a relationship with SpaceX that "largely ended years ago," citing interviews with former employees who said the aerospace company has not purchased a new Velo3D printer since 2022. The short-seller added that its interviews also suggest that SpaceX now has the ability to manufacture its own machines under a 2024 intellectual property licensing agreement.
"A former employee explained that there has been little effort from Velo or SpaceX to continue the relationship, and that SpaceX has found an alternative to Velo that can produce at least one of the parts previously made on the Sapphire," the report stated.
The report alleged Velo3D overstated its relationship with SpaceX, exaggerated the strength of its defense pipeline, and misrepresented aspects of CEO Arun Jeldi's background.
Morpheus Research Questions Velo3D Defense Pipeline
Morpheus Research also questioned Velo3D's growing focus on defense and aerospace, arguing that its pipeline is filled with "highly speculative" deals that are unlikely to generate meaningful revenue for the company. The report pointed to deals with Momentus and government programs, alleging some contracts have received limited funding or guarantee no revenue despite being highlighted by the company as strategic wins.
The short-seller also challenged Velo3D's competitive position in metal additive manufacturing, citing interviews with former employees and industry experts who described the company's printers as less reliable than competing systems from EOS and Nikon SLM. Morpheus Research argued that Velo3D's push into in-house parts production through its Rapid Production Solutions business is unlikely to offset those challenges, citing concerns from former employees about the strategy's economics and scalability.
Velo3D Stock Falls Nearly 10% Thursday Morning
Velo3D shares fell nearly 10% in Thursday morning trade before recovering partially to hover 5% lower. Retail sentiment on Stocktwits around Velo3D trended in the neutral territory at the time of writing. One user stated the short seller's accusations are serious.
Velo3D stock is up 24% year-to-date and 126% over the past 12 months. The ARK Autonomous Technology & Robotics ETF (ARKQ) is up 44% over the past 12 months, while the 3D Printing ETF (PRNT) is up 15%.
FAQ
What did Morpheus Research allege about Velo3D's relationship with SpaceX?
Morpheus Research alleged that Velo3D's relationship with SpaceX "largely ended years ago," citing interviews with former employees who said SpaceX has not purchased a new Velo3D printer since 2022. The short-seller also stated that SpaceX now has the ability to manufacture its own machines under a 2024 intellectual property licensing agreement.
Why did Velo3D stock fall on Thursday?
Velo3D stock extended its decline for a fourth consecutive session on Thursday after Morpheus Research published a report alleging the company overstated its relationship with SpaceX and questioned its defense and aerospace pipeline as filled with "highly speculative" deals. Shares fell nearly 10% in Thursday morning trade before recovering partially to hover 5% lower.
