3D Print Stocks “Cratering”? “Entire Industry Appears to Be Falling Apart”? No, No, No

By on July 24th, 2016 in Corporate

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 Some of the contending 3D print vendors
Some of the contending 3D print vendors

I’m reading some recent pieces analyzing the stock prices of publicly traded 3D printing companies and I’m having a hard time believing what I’m reading. 

One piece, on The Motley Fool, says: 

Yesterday was a miserable day to be invested in the 3-D printing industry. In one fell swoop, analysts at Piper Jaffray took down shares of both 3D Systems (NYSE:DDD) stock, and archrival Stratasys (NASDAQ:SSYS), warning that the entire industry appears to be falling apart. Or almost the entire industry.

Another analyst report says: 

Following Q2 checks, we believe system demand was significantly below plan for both 3D Systems and Stratasys in the June quarter, and anticipate Q2 and 2H results will come in below consensus expectations,” Jensen said. “We believe the main reason for the slowdown was sustained weakness for prototyping-focused machines compounded with the launch of HP’s Fusion Jet and Carbon 3D’s M1 platforms in Q2.

Indeed, there has been a bit of a crash in the past week. Check this chart, which shows the path of 3D Systems, as a representative of this industry. Note the sharp collapse! Horrors!

 3D Systems stock appears to have crashed
3D Systems stock appears to have crashed

But wait – let’s zoom out and look again. In this chart we see the stock price from a longer term, year to date. Where does that “cratering” fit now? In the case of 3D Systems, the stock price appears to be more-or-less rising, with some bumps along the way, ever since they hired their new CEO this spring. The “cratering” seems little different than any of several other “bumps” earlier this year. 

 But has it really crashed? Look at the trend since May
But has it really crashed? Look at the trend since May

However, the analysts correctly point out that there have been a decrease in orders for equipment from the major manufacturers, Stratasys and 3D Systems. These two companies have set the benchmark for financial performance in the industry for literally decades. 

The problem is that it may not be case in the near future: HP is readying a comprehensive 3D print technology offering that could potentially compete with the existing players. As well, Carbon has set up their business to address the same industrial market, the one where Stratasys and 3D Systems make their profits. These two new players are notable in that they both have the financial resources to significantly enter the industrial market, far more than almost any other new entrant. 

Potential customers are obviously waiting a bit longer to see what these two new players come up with before making a purchase decision. It’s the smart thing to do, but in the meantime the existing players are seeing a slowdown in orders. This all makes perfect sense. 

The truth is that both existing players are very well aware of possible competitive effect from HP and to a lesser extent from Carbon. They’ve no doubt been developing strategies to address the situation, and we may see something from each of them. However, 3D Systems has the added challenge of transitioning to the new regime under their new CEO, Vyomesh Joshi. 

The next half of the year will be very interesting. 

Via The Motley Fool and StreetInsider

By Kerry Stevenson

Kerry Stevenson, aka "General Fabb" has written over 8,000 stories on 3D printing at Fabbaloo since he launched the venture in 2007, with an intention to promote and grow the incredible technology of 3D printing across the world. So far, it seems to be working!