It Was a Horrible Week for 3-D Printing Stocks
It didn't matter what 3-D printing stock you owned last week. Chances are you felt some pain.
Week of Nov. 18 Performance
Source: Yahoo! Finance. Author's calculation based on closing prices on Nov. 15 and Nov. 22.
It started with a bang
On Monday, Stratasys caught a price-target increase from Bank of America Merrill Lynch, which lifted the entire sector higher. BofA raised its price target $10 to $140 and sees growing consumer adoption for low-end 3-D printers boosting the company's revenues. Last quarter, Startasys' MaketBot line of consumer-oriented printers accounted for $11.6 million in revenues, or roughly 9% of the company's total revenues for the period.
On Tuesday, 3-D printing stocks got hammered, and the worst hit was Voxeljet, closing down more than 15% on the day. Absent of any major news, Tuesday's action created a perfect opportunity to take a step back and reflect on the bigger picture. The key takeaway was that one bad day in the market isn't going to change the fact that the entire 3-D printing sector has enjoyed tremendous growth over the past year. It also acted as a reminder to 3-D printing investors that they'll probably be better served by being patient, because this growth story is likely far from over. Sometimes, a little perspective can go a long way.
Bear takes aim
Last Wednesday, Citron Research put out a damning report on Voxeljet, which freaked investors out and sent Voxeljet shares tumbling more than 32%. Unfortunately, the damage wasn't contained to just Voxeljet, and the entire sector finished sharply lower. Citron questioned the quality of Voxeljet's earnings, which it believed to be a distortion from reality. For one, it took issue with the fact that Voxeljet recognized revenue in connection to a sale of a printer, which was partially financed thorough a loan. Considering Voxeljet's 3-D printers can cost upwards of $1 million each, I had a hard time seeing why it would be a problem for customers to request financing. At the end of the day, I found Citron's report to be blown entirely out of proportion. Read my full take on the matter by clicking here.
Sell-side to the rescue!
The next day, the sell-side sounded its bullish alarms on the 3-D printing sector, and as a result, all but Voxeljet finished higher. S&P raised its price target on 3D Systems from $63 to $84, and Piper Jaffray put out a bullish note on Stratasys, saying how Stratasys' management was upbeat during a recent talk. Piper now thinks Statasys' MakerBot sales have been faring better than expected. Also noteworthy, Citigroup tried to calm fears surrounding Voxeljet by defending its loan practices. According to Citi, only three of Voxeljet's 52 customers have used financing to purchase its printers. Currently, Voxeljet has two customer loans on its books, totaling 928,000 euros.
A sigh of relief
Friday was 3D Systems' time to shine. The company announced a multi-year partnership with Google's Motorola handset division to create a continuous high-speed 3-D printing production platform for its Project Ara. Project Ara is Motorola's newest creation aimed at creating a customized smartphone experience by using modular and swappable parts. Not only will this development probably advance the role of 3-D printing in finished goods manufacturing, but it also has the potential to revolutionize mass-scale manufacturing.
It was certainly a wild week for 3-D printing stocks, and I don't expect it will be the last. Investing in this space requires a high tolerance for volatility and a long-term mind set -- the reason being, in 2012, the 3-D printing industry was estimated to be worth roughly $2.2 billion. By 2021, Wohlers Associates believes the 3-D printing industry will grow by nearly fourfold and become a $10.8 billion industry. With this sort of growth and promise, it's not surprising for investors to get a little ahead of themselves from time to time. At the end of the day, let's not lose sight of the fact that 3-D printing is much bigger than one week's worth of developments.
Forget billions -- 3-D printing could be worth trillions.
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The article It Was a Horrible Week for 3-D Printing Stocks originally appeared on Fool.com.
Fool contributor Steve Heller owns shares of Google, 3D Systems, and ExOne. The Motley Fool recommends 3D Systems, Bank of America, BMW, ExOne, Google, Nike, and Stratasys; owns shares of 3D Systems, Bank of America, ExOne, Google, Nike, and Stratasys; and has options on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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