Holders of 3D Systems stock (NYSE:DDD) have been having a bit of fun in the past months, as the stock price has jumped and fallen.
There’s some interesting reasoning behind the moves, but what exactly happened?
3D Systems’ stock has been generally sliding downward from February of this year, when it was in the US$12 range. Since then it’s gradually sunken to a low of US$4.60 in mid-September.
That kind of a slope isn’t particularly attractive to stock buyers. But then following the bottom in September, the stock has risen precipitously, hitting a high point of US$8.50 a couple of days ago.
But then it dropped again and as of this writing it’s in the US$7.75 range.
What the heck is going on? Why is the stock going up and down so much?
The gradual decline over most of 2020 has a good explanation: the company has switched CEOs and the new administration has yet to announce any changes significant enough to push the stock price, and the price is mainly running on previous momentum that wasn’t particularly strong.
But in September it seems there has been a change, but not from 3D Systems itself. The answer seems to be with Align Technologies (NASDAQ:ALGN), the makers of the Invisalign tooth straightening system.
Orthodontic aligners, as they are known, are a popular way for individuals to straighten teeth. An aligner is simply a plastic piece worn regularly on top of the teeth that gently pushes teeth into optimal positions, and as such must be perfectly customized to each individual.
That is, of course, the optimal use case for 3D printing: mass production of an individually customized product, and sold at a premium.
Align Technologies produces these aligners with 3D Systems equipment. They’ve been doing so for a very long time, and it’s been a great relationship for both parties.
This past week Align Technologies released heir quarterly results, and it seems they have grown significantly. They hit record revenues for the third quarter and said they grew 21% year over year, which is quite notable. They also said they produced their nine-millionth patient aligner.
They say the growth is due to a strong marketing campaign, which could be true. Nevertheless, their growing business needs to produce even more aligners, and that means they will no doubt need more 3D Systems equipment installed.
The bump in 3D Systems’ stock value is near doubling their market value from a couple of months ago, and it appears that the buzz from the aligner business has echoed off of 3D Systems to cause their market value to be raised by a whopping US$400M.
Whether the increased aligner business is actually worth US$400M remains to be seen, but in the eyes of investors it seems so, at least so far.
Via Google Finance