After a torrid run in the just-concluded earnings season, 3D Printing stocks seem to have found their momentum back as exhibited by the recent upsurge in share prices. Although most of the companies in the sector had reported in the red, woefully missing their respective earnings estimates, the sudden reversal in share price performance indicates that the worst is probably over.
Comparative Stock Market Performance
Judging by the last five days trading performance relative to stock prices, the 3D Printing stocks had a phenomenal run despite the industry shake-ups relative to the abysmal earnings surprises. Leading the pack is The ExOne Company XONE that is up 24.2% compared with the benchmark S&P 500 index performance of 0.3%. Next in queue is Voxeljet AG VJET (up 15.2%), followed by Stratasys Ltd. SSYS (up 6.7%) and 3D Systems Corporation DDD (up 4.9%).
Stratasys appears to be the lone bright spot in the earnings chart among these stocks with a positive earnings surprise of 66.7%. However, the below-par third-quarter performance was primarily attributable to the short-term imbalance in the demand and supply chain due to macroeconomic factors and was in no way attributable to any shortcoming in the industry per say.
Inherent Growth Prospects
Since its conception in the ‘80s, the 3D Printing stocks have graduated from being a novelty to having an enterprise focus with widespread usage in diverse industries including automotive, aerospace, oil & gas, technology and medical. Of late, 3D Printing technology has also ventured into creative sectors like fashion and gaming. The technology has even found application in the sports industry for the development of custom protective gear and spike plates for soccer shoes. The retail sector has also deployed the technology for manufacturing jewellery and home decor items among others.
As manufacturing applications increase and markets mature, ROI is likely to rise manifold. In addition, operating costs are comparatively much lower than traditional manufacturing process owing to higher efficiency and lower wastes through sustainable manufacturing practices. A low probability of errors, ability to develop customized products, proficient use of varied raw materials and competency over traditional processes are the driving factors for the industry.
Prime Long-Term Potential
According to market research firm CONTEXT, over half a million 3D printers have already been shipped across the globe between the 1980’s and mid-2015 and the industry is currently on track to ship its millionth unit by 2017. Data from Wohlers Report 2014 reveal that the worldwide 3D printing industry is expected to grow from $3.07 billion in revenue in 2013 to $12.8 billion by 2018, and exceed $21 billion in worldwide revenue by 2020 with a CAGR of 34%.
As the industry begins to stabilize after probably reaching its bottom, the market is primed for new entrants to lead the way. These include established players from the 2D printing market like Canon Inc. CAJ, Ricoh Company, Ltd. RICOY and HP Inc. HPQ. Whether these incumbents will be able to augment the overall industry with their proven expertise remains to be seen. But it has surely given fresh impetus and lively competition to other 3D Printing stocks.
Moving Forward
We believe that as 3D Printing begins to permeate across more sectors, the time is ripe for investors to enter the arena and ride the impending wave of growth. Moreover, the entry of new players will act as a catalyst for the industry and has the potential to redefine market dynamics.
Investors should watch out for the 3D Printing space, as the industry seems to be on the brink of a major transformation, with expanding end markets, burgeoning applications for the technology and rising new players. So isn’t this the right time to cash in on some premium 3D stocks?
(We are reissuing this article to correct a mistake. The original article, issued on Nov 27, 2015, should no longer be relied upon.)
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