While the company has introduced new products, it appears their revenue is stuck.
An interesting investor-style analysis by George Kesarios on Seeking Alpha shows some of the troubles being experienced by 3D printing giant 3D Systems over the last few years.
In the early to mid 2010’s 3D printing stock prices soared as the public became aware of the technology, mainly through elaborate marketing programs by certain desktop 3D printer startups. That interest transformed into massive jumps in stock prices as folks scrambled to buy up as many 3D printing companies as possible.
However, reality set in during the 2014-2015 period and stocks cratered, including 3D Systems. From a peak price of almost USD$100 per share in January 2014, the price now languishes at only USD$12.
The reason for the run up was the expectation that companies would leverage their technology to grow and make many more sales. Essentially, the high stock price reflected what people think the company will grow into. But that seems to have not occurred.
Consider the chart at top made by Kesarios, which shows 3D Systems’ revenue over the past few years. As you can see, the company’s revenue is more or less flat over the last few periods.
This situation is most definitely not good for a company’s stock price, which relies on the expectation of growth. If there isn’t growth, the price will be lower. Which it is.
How can 3D Systems break out of this? I believe they need to delve into new markets with new products. In particular, the market for 3D printing production systems may indeed explode over the next few years as manufacturers discover the advantages of the technology.
But to catch that wave, 3D Systems has to have the right products ready to go. Do they? I’m not sure.
I’m not privy to what takes place in their secret underground labs, but I would expect they should be developing something that would align with future production system needs. Perhaps the start of it was their Figure 4 device shown prominently at recent trade shows?
But is that what manufacturers need? Or is it simply what 3D Systems is able to build, using their current technologies?
3D Systems must have a strong strategy for hitting the production market hard if they hope to grow. If not, they will have to maintain their current products and markets, which are a lot smaller. And they’ll have to fight off an increasing wave of more inexpensive products from startups and others that offer quality solutions.
Via Seeking Alpha