“Have you seen the price jumps of the 3D printing stocks? What are you long? You must have invested in some, right? Is 3D Systems the one to go with?”
Having some background in both 3D printing and finance, I hear these questions quite often. Well, at least I used to hear them. 3D printing stocks were the ‘pretty girl in class’ for the past year or so, until the 3D Systems (DDD) recently announced it’s preliminary results for the year 2013, which made the stock price plummet and set the market haywire.
Was it really a surprise?
The news, I mean. If you had studied 3D Systems more closely you would have noticed many things that normally would raise alarms in any investor’s mind. Without going into too much details their growth strategy has been based on acquisitions, without actually selling too many of their own 3D printers. Their consumer focused 3D printer does not get much appraisal from the maker community.
So what has made theirs and other 3D printing stocks skyrocket? Is just a charismatic CEO (he really is) and effective marketing (it really is) enough? Could be, but it could also be that people are lazy to do their homework and just invest when it seems like the right time? Or, that they like to believe a hyped future that has been going around 3D printing recently? Possibly. Or could it just be that there is a lot of speculation around 3D printing at the moment? The trading volumes were fairly small couple years ago and once investors are starting to make the move the prices go up fast. It’s a very simple cycle, the more people buy the higher the price goes. And now their jealous friends see they are making money so they want in too… That’s how bubbles are born.
What really tells that the 3D printing stock market is highly unstable is that one of the companies is announcing their preliminary (hold on let me repeat that: preliminary) results the investors freak out, pull out prices drop. Too many riding the speculation wave on stocks that market analysts call ‘overpriced’? Perhaps. Well some are definitely making money, but for how long?
What else is out there?
Looking into the other obvious options Stratasys (SSYS), from business perspective would seem like a more stable option than their arch rival. They just recently announced a new inkjet 3D printer Objet Connex3 that is capable of printing multi colors and materials. Well, perhaps. But then again, should be remembered that its not a 3D printer that we would buy for home use (even though it’s the coolest 3D printer I have ever seen). So what about Stratasys consumer 3D printers, which seem to have been one of the biggest hype drivers, – the recently acquired MakerBot and their Replicator 3D printers? Well, the maker community has been quick to judge with not so favorable results.
How about the metal 3D printing companies like ExOne or voxeljet? The medical applications for 3D printing in high cost industries such as aerospace are growing. Or, what about Organovo or the other medical industry 3D printing companies? Surely there is need for those in the future? I totally agree. But the question is ‘when’? When will it become everyday to print organs etc.?
One option that I genuinely have recommended for those who wouldn’t want to miss the 3D printing train, is to look into a recently launched 3D Printing and Technology Fund. It could well be an option for the ones who don’t want to manage their own investment, or play their eggs on only one basket, or want to start with small investment.
In the long term I am extremely positive that the 3D printing stocks will have high value. Which ones? Personally I believe in the medical companies. The key here is to look at the fundamentals of the business, and not so much in the short-term price changes. I am little skeptic in the consumer / maker business from 3D printer manufacturer perspective, but believe that the consumer services should be thriving in the shorter term. The key is that people don’t want to buy a technology; they want to buy a solution. As long as the home grade 3D printer is very limited what it can do, the wider adoption is not going to happen.
3D printing is still a small industry, and although has a great potential to do (almost) everything the media writes about it will take time. The problem from investment perspective, as I see it, no one really knows where the industry is going.
For those interested in 3D Printing investing I would warmly recommend the best 3D printing investment resource in my opinion: https://3dprintingstocks.com
Disclaimer: I don’t have a position on any 3D printing stocks, nor am I getting any kickback from any of the organizations mentioned.