3D Systems stock has taken the biggest leap upwards in years.
Last Wednesday the stock closed at US$11.24, well within its usual range. As of this writing, the stock has shot up to close to US$30!
The stock had traded at close to US$100 back in 2014 when it led the 3D print consumer craze in mass media. However, cooler heads prevailed and the stock cratered into the US$10-20 range for years afterwards.
In recent months the price has been slowly declining. Between summer of 2018 and this past fall the price fell from over US$20 to under US$5 as recently as October.
The reason for this decline was pretty straightforward: 3D Systems management was unable to produce profits during the entire period of decline. This was due to increasing competition, few introductions of new products and handling the burden of dozens of acquisitions made during the company’s 2010-2015 heydays.
However, in 2020 the company changed their management and consequently their strategies. They’ve been focusing hard on reducing costs in the past few months under new CEO Jeffrey Graves. Over the summer Graves announced a series of strategic changes that are only now becoming apparent.
One of the key elements of their new strategy was to divest of non-core lines of business, effectively undoing the acquisitions of the past. That’s certainly a difficult challenge as many of the acquisitions didn’t make sense at the time, and even less now.
However, in November 3D Systems announced they had struck a deal to sell Cimatron and GibbsCAM, systems that really have a distant relationship to pure 3D printing. At the time of the announcement it became known that the sale price was substantially less than 3D Systems had paid for the acquisition in years earlier.
This week the stock price rocketed skyward.
So what is causing the dramatic jump in stock price this week? It seems the company announced the deal to sell Cimatron and GibbsCAM had actually closed. That’s good news, but it seems surprising to me that investors would jump on this news as it has been known for literally months.
It may have something to do with the upcoming quarterly results from 3D Systems, which have been hinted at with a preliminary release of information. In this release they are expecting 2020Q4 revenue to be between US$170-176M, which is quite far above the expected US$140M. They also seem to be closing the gap on profitability, getting as close as a loss of only US$8.9M (GAAP).
It seems that investors are hoping this information is beginning of a trend for 3D Systems, and expect the company’s fortunes to rise in 2021.
Via Yahoo Finance