Velo3D Inc. (VELO) shares fell about 6% on Tuesday as investors weighed the company's production expansion against continued pressure from a recent short-seller report. The stock also gave back part of Monday's sharp rebound after early gains faded, leading to volatile trading.

Monday Rally Fades

Tuesday's decline followed a 10.5% rally on Monday after Velo3D joined both the Russell 3000 Index and the Russell Microcap Index as part of the 2026 Russell index reconstitution. Chief Executive Officer Arun Jeldi said the additions broaden the company's visibility among institutional investors and the wider investment community.

Short Report Continues to Weigh

Despite the recent rally, the stock remains under pressure after Morpheus Research published a bearish report on June 25. The short seller questioned the strength of Velo3D's aerospace and defense business and accused the company of overstating its prospects. Morpheus Research said, "We believe it's only a matter of time before investors see Velo3D for what it is: an obvious promotional grift orchestrated by a CEO with a wildly exaggerated resume that appears to be almost completely fabricated, a track record of business blow-ups and litigation, and no experience running a public company."

Analysts Remain Divided On Velo3D

The short report stands in contrast to a bullish view from Needham analyst Austin Bohlig, who initiated coverage on June 25 with a Buy rating and a $33 price forecast. Bohlig said, "We believe the company's leading metal additive manufacturing platform is becoming a critical enabling technology for the reindustrialization of the U.S. aerospace and defense (A&D) industrial base." Needham expects Velo3D to generate $65 million in revenue in 2026.

Company Expands Manufacturing Footprint

Separately, Velo3D announced Tuesday that it will open a 288,747-square-foot advanced manufacturing facility in Livermore, California, to expand production capacity. Jeldi said the investment reflects growing customer demand as manufacturers move from prototyping to full-scale production.

Velo3D Price Action

VELO Stock Price Activity: Velo3D shares were down 5.98% at $17.30 at the time of publication on Tuesday, according to market data.