Is 3D printing a good investment? Apparently not, according to some professional investment funds.
I took a look at one of them, “PRNT”, the “3D Printing ETF” by ARK Invest. ARK is a notable American investment firm that tends to work in a variety of unusual emerging tech areas. One of them is an ETF focused on 3D companies.
An ETF is a basket of assets, including company stocks, that acts like a stock itself. It can be traded throughout the day when markets are open. In this case, ARK’s PRNT ETF includes companies like Xometry, Renishaw, Materialise, Stratasys, etc.
At the top you can see the valuation of this ETF over the past nine years. While there was a bit of a burst around 2021, the valuation of this ETF has been basically flat for its entire existence.
According to ARK Invest, the market price of this ETF since inception has been 1.39%. Imagine buying an investment nine years ago and gaining less than two percent after all that time!
The ETF’s market value has been up over the past year, but only 12%.
What’s going on? Why is this so flat?
It’s all about over-investment. Multiple companies roared onto the 3D print scene in the past seven or so years, all claiming they would capture a chunk of the massive manufacturing market. They would do so because their revolutionary technology would change how manufacturing is done.
Well, it didn’t, and they have all mostly disappeared. In many cases, these companies had accepted staggeringly huge investment cash from hopeful investors, but in the long term, most of those companies had their valuations cut to only ten percent of the original value. Or five percent. And in some cases, zero percent: the companies went out of business.
The problem was that the technologies were simply not sufficient to actually capture a significant portion of the manufacturing space. This meant lower revenue than expected, and consequently, lower valuations. The investors were burned.
That burn is remembered, and as a result, there is far lower demand for any 3D print stock these days. Why invest in a technology that isn’t going to grow? That’s why the PRNT ETF is flat; few are investing in the underlying stocks.
This is all bad news for PRNT investors. However, there could be a way out.
While investors in general now avoid 3D print stocks, there are several companies in the space that are actually growing and do have significant potential for the future. These are largely ignored by investors, and the companies struggle to find cash to grow.
It’s possible that an ETF might swap out some of their deadwood stocks for a few of the smaller companies that might offer growth potential. If they do grow, then the ETF’s value might also rise.
But that’s just an idea.
Via ARK Invest
