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Is it Time to buy 3D Printing Stocks?

Michael Singer - Wednesday, February 03, 2016

On March 3rd of 2009, as the financial crisis took stocks in the United States to record lows and S&P Index hit an intraday low of 666, Obama said that ‘purchasing stocks now is possibly a good deal, if you have a long-range perspective on it.’ And since that time, S&P has tripled to a high of 2070, thereby making Obama’s amongst the best stock calls of history. The ones who own stock within the 3D printing field are hoping the same is going to hold true for this technological microcosm – that doesn’t necessarily follow dynamics which are in line with the ones of the stock market as a whole.

As we don’t have a “composite” three-dimensional printing stock index – as stocks in 3D printing companies are traded on different markets – judging by my own portfolio-- that involves most traded 3D printing businesses, these stocks are tanking. Within late 2013, the enthusiasm that surrounded the discovery of three-dimensional printing by consumers drove many businesses to pursue IPOs and witness their stock prices quickly inflate, with sectors leaders Stratasys and 3D Systems recording market capitalization of multiple times their annual revenues.

Stratasys 3D Systems

Since that time, newly traded businesses like ExOne and voxeljet dropped near 80 percent of their stock value, whereby 3D Systems, which during one time was trading above $80, now is trading at $28.5, and Stratasys went from well above $120 - $61. There will include more instances of 3D printing “pure players” having trouble with the financial markets: Materialise, a 3D printing service in Belgium is down from an IPO price of $12 to around $8, and so is Alphaform based in Germany (€5 - €3) and Protolabs based in America ($80 - $65). The only public 3D bioprinting businesses, Organovo, is down around 50 percent from its historic high of $12. SLM Solutions—that’s traded on XETRA from the Germany, and Arcam Metals—that’s traded upon the Swedish NASDAQ dropped about 20 percent of their value since their respective highs within February and June of 2014.

Three-dimensional printing-associated companies which are doing well are “mixed players,” like Reniswhaw. The company in the United Kingdom generates 2 SLM 3D printers and witnessed some substantial expansion from a low of around £1,400 in June of 2014 to today’s £2,340/stock. The largest gainers in this case include the bigger 3D software businesses: Dassault Systems and Autodesk. Investors probably are alert to the fact that, prior to additive manufacturing fully taking hold, it’ll take place at a software level and will be, thereby, rewarding those two businesses which are fueling this change. Both companies recorded substantial gains over the last couple of months, which took them to record highs of $57, as well as €58 respectively. The exact same will go for Hewlett Packard, which made some small gains since its announcement of “blended reality.” If you’re a non-US resident who purchased stocks denominated in dollars, you additionally stood to gain from the USD’s latest appreciation.

The hype cycle curve by Gartner is, thereby, proving very accurate, as 3D printing heads away from the peak of original consumer enthusiasm. The positive news is that it additionally entails a new stage of steady organic growth. It seems to be confirmed by the majority of 3D printing organizations’ real economic data-- that witnesses revenues increasing from 35% to 50% from many companies, which include Stratasys, 3D Systems, as well as Voxeljet within the first part of FY 2014. ExOne reported a reduction in machine revenues, but it has been considerably investing in incrementing its production abilities with new centers in the United States and Germany.

It’s unlikely that stocks are going to reach the heights of the 2013 hype anytime soon, and likely will actually dip a bit more to completely reflect the companies’ true revenues. Therefore, if you’re in it for a fast gain, you may be better off investing into something else. Though, this additionally reminds me of one other graph I recently saw, which displayed how small investors typically chose to sell and buy just a bit too late. Listening to President Obama in the year 2009 might’ve seemed foolish, as confidence was at an historic low and darker times loomed on the horizon. With stocks in 3D printing, the outlook isn’t as bleak and I’ll go on record to say that they seem like a possible good deal. Of course, if you have a long-range perspective on it.

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