I’m reading a piece entitled, “3D Systems: On The Verge Of Turnaround”, and have some thoughts.
The story on Motley Fool says there are reasons to suspect that 3D Systems’ stock price could triple in 2020. I am finding that a very hard position to agree with.
3D Systems’ issues have been present since the company’s stock price crashed after the consumer boom evaporated, and investors fled. In fact, it seems that 3D Systems has not been able to manage a profitable quarterly report since that time.
3D Systems Turnaround?
The case made for a 3D Systems turnaround in the report suggests the following:
While consumer interest has fallen away, there is a strong and growing niche use of 3D printing in fields such as healthcare.
3D Systems has been able to control expenses, although not sufficiently aggressive to overcome low revenues and create a profit.
New “combinations of materials” will enable “unprecedented 3D printing applications”.
The sector is now mature and is able to identify truly profitable applications.
3D Systems’ CEO Vyomesh Joshi has been successful with cost-cutting, but is to put “more emphasis” on profitability.
3D Systems has seen some growth in materials sales, particularly in the EMEA region in healthcare applications.
3D Printing is set to capture a much larger portion of the enormous manufacturing segment.
Many of these points are indeed very true. However, there’s a big problem with connecting them to an increased 3D Systems’ stock price: aside from the 3D Systems expense reduction, none of it has much to do with 3D Systems. In fact, these reasons for growth are applicable to ALL players in the 3D printing industry.
And it is indeed a highly competitive market. There are now more players than ever before, many with entirely new 3D printing processes, materials and sales practices that can be more effective than those used by the older 3D printing companies.
3D Systems in 2020
The biggest challenge facing older companies, including 3D Systems, is that their original patents that enabled their huge initial growth, are now largely expired. For these companies to succeed they are going to have to invent new processes, materials and methods to compete with the upstart companies that have their own patents. The shoe is now on the other foot.
That said, the older companies still have tremendous resources at their disposal. The challenge will be to develop new approaches that can meet the up-and-coming competitors at their own game.
I haven’t recently seen a dramatically new system from 3D Systems that is able to do so. Perhaps that will happen in 2020, but it will be very hard to do.
Via Motley Fool