A stray career posting at Tesla has ignited the stocks of certain 3D printer manufacturers.
The job posting is for the role of “Additive Manufacturing Technician”, and is located at the company’s Sparks, Nevada location. This is the site where their first Gigafactory is located, and is the site where many of Tesla’s batteries are produced.
The job posting says:
“Tesla is seeking a highly motivated individual interested in acquiring, and expanding, the skill sets necessary to operate SLA/SLS/FDM 3D printing equipment in our rapidly growing Additive Manufacturing operations.”
It goes on to describe the requirements and skills necessary to apply, and there’s nothing particularly unusual for a 3D printer operator role. It does require experience with “CATIA, SolidWorks, Pro E, Rhino, or other CAD manipulation software”, and the “ability to think in 3 dimensions”.
Ominously, the job description also says:
“Willingness to work overtime and/or weekends as required, with little to no advance notice, and sometimes for extended periods.”
Here’s the entire description, in case it is taken down:
In all, this doesn’t seem particularly notable. A company is looking for a slightly-experienced 3D printer operator with the ability to perform some tweaks on 3D models. And it’s just one single position.
No big deal.
Or is it?
After this job posting was noticed by the market, the stock prices of several 3D printer manufacturers abruptly rose. Consider these changes in a single day’s stock trading:
- Stratasys (SSYS) US$13.36 -> US$14.13, +5.7%
- 3D Systems (DDD) US$5.36 -> US$6.36, +18.7%
- ExOne (XONE) US$11.65 -> US$13.20, +13.3%
And let’s look at those same companies in terms of market capitalization, or the value of all the stocks before and after the price move:
- Stratasys (SSYS) US$724M -> 778M, +53M
- 3D Systems (DDD) US$642M -> 761M, +120M (!)
- ExOne (XONE) US$221M -> 250M, +29M
Those are very strong advances for a single day of stock trading: if a 5.7% increase happened every trading day, the stock would rise 3X each month. That’s significant, but of course that’s not going to happen here. The other rates of increase are even more significant.
The rise in 3D Systems stock price is quite amazing, as that company’s stock price has been in a gradual downwards coast for months. Even the installation of a new 3D Systems CEO hasn’t made the needle move.
But this stray job posting from Tesla seems to have done the trick.
What are investors thinking? Do they really believe that a posting for a single 3D printer operator in Nevada is going to result in increasing the value of ExOne by US$29M?
Or 3D Systems by a whopping US$120M?
Or all three companies by over US$200M?
To put this in perspective, a dollar of stock value is typically more-or-less worth five years of $0.20 annual profit. And a reminder that profit is the margin of a product price over the cost of producing that product. In 3D Systems’ most recent public filing, their margin is about 31.4% on sales.
The US$120M value jump suggests 3D Systems would be gaining something around US$24M in annual profit somehow. But with a 31.4% margin, that in turn suggests additional sales of around US$76M. That would correspond to hundreds of 3D printers.
Is the market thinking that Tesla is going to buy hundreds of 3D Systems products? It would seem the answer to that would be “NO”, since they are hiring exactly ONE 3D printer operator.
Even worse, stock prices rose for all three companies! If we do the same calculation, it would appear the market believes Tesla is apparently to buy thousands of 3D printers from these organizations.
That’s simply not going to happen.
And this entire episode is an excellent example of how buyers of stocks don’t understand what’s really going on in companies. Hah, I even suspect that 3D Systems’ stock price rose higher than the others simply because “SLA”, 3D Systems’ process, was mentioned first in the job posting.
Interestingly, the job post was listed on August 26th — but a few reports circulating now tie these stock raises to the listing, which seems to have been picking up new notice. Hm.
You may now resume your normal investments.