Tag Archives: SSYS

Mass Consumer Indifference Killed All Hope for 3D Printing Stocks

A few years back, 3D printing was being advertised as the next big thing in the consumer technology world.

As a result of that hype, 3D printing stocks were flying high. 3D Systems Corporation (NYSE:DDD) was a $90 stock in 2013. Around the same time, Stratasys Ltd (NASDAQ:SSYS) was a $130 stock, while Voxeljet AG (ADR) (NYSE:VJET) was a $40 stock and ExOne Co (NASDAQ:XONE) was a $60 stock.

Since then, times have changed. 3D printing never took off. And even the best 3D printing stocks have dropped like a rock.

DDD stock fell from $90 to $11 today. SSYS fell from $130 to $20 today. VJET stock dropped from $40 to $4, and XONE stock collapsed from $60 to $7.

Such huge drops in 3D printing stocks across the board comes with a ton of questions. Why are 3D printing stocks down? Are things getting better? Could these beaten up names rebound?

In short, 3D printing stocks got hammered because mass consumer adoption of 3D printing never happened. Things aren’t really getting that much better. And the stocks don’t make for good rebound candidates just yet.

Here’s a deeper look:

Why 3D Printing Stocks Are Down

Back in 2013, 3D printing was supposed to be the next big thing in consumer technology.

The underlying technology of 3D printing had been around for a while, but it had compressed and simplified to a point where consumer 3D printers were morphing into a reality.

As such, back when consumer 3D printing was just coming into the fold in 2013, technology enthusiasts were making the case for a 3D printer being in every home (even then-President Barack Obama 3D printing industry a shout-out in a State of the Union address).

But those enthusiasts underestimated how much every-day consumers just don’t need a 3D printer.

3D printing is a complex, laborious, and time-consuming process that isn’t designed for most of us. The average consumer not only lacks the knowledge to run such a machine, but also the desire. What exactly do I need a 3D printer for?

Plus, the printers cost a whole bunch. And the maintenance costs aren’t cheap, either. Consequently, mass consumer adoption of 3D printing just never happened.

And the 3D printing stocks that were trading on mass consumer adoption euphoria, dropped.

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Why Things Aren’t Getting That Much Better

The entire 3D printing market, however, hasn’t been a dud.

There are some exciting things happening on the industrial 3D printing side. Big industries like aerospace and healthcare have found some cool ways to use 3D printing to improve supply chain productivity and create medical devices. There are also use-cases for 3D printing in the automotive, dental, and entertainment industries.

But demand for industrial applications of 3D printing continues to remain rather weak.

Last quarter, DDD reported paltry revenue growth of just 6%. Meanwhile, revenues are actually falling at SSYS.

Granted, revenues at XONE and VJET are rising by a ton, by both of those are from a really small base. Thus, the broad trend is that once these companies reach scale in the $500 million-plus range, revenue growth is anemic.

That is because industrial demand just isn’t that robust, either. The reality is that 3D printing is an exceptionally niche market with an equally niche target audience, both on the industrial and consumer side. Thus, at scale, 3D printing stocks are low-growth companies.

Bottom Line on 3D Printing Stocks

3D printing stocks aren’t cheap. DDD trades at 40-times next year’s earnings, while SSYS stock trades at more than 30-times next year’s earnings.

But 3D printing stocks should be cheap considering their low growth prospects.

Consequently, I don’t think a rebound for 3D printing stocks is in the cards any time soon. Valuations still have a ways to come down before being reasonable.

As of this writing, Luke Lango did not hold a position in any of the aforementioned