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.

Company

Week of Nov. 18 Performance

3D Systems (NYSE: DDD  )

(9%)

Stratasys (NASDAQ: SSYS  )

(6%)

ExOne (NASDAQ: XONE  )

(10%)

Voxeljet (NYSE: VJET  )

(39%)

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.

Black Tuesday
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.

Looking forward
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.

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Read/Post Comments (7) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 24, 2013, at 5:49 PM, temenem wrote:

    +1, exactly.

  • Report this Comment On November 25, 2013, at 4:24 AM, stenkall365 wrote:

    A horrible week? Except from VJET, if you think -6-10% is "horrible" maybe you should invest in a somewhat more mature market.

  • Report this Comment On November 25, 2013, at 7:29 AM, hacker44240 wrote:

    Lol! I have tripled my money in these stocks in a very short time. I will hold long and strong for the 5 to 10 year time frame. If you call a healthy pullback "a horrible week", then you really are a "fool." A savvy investor would call it a buying opportunity.

  • Report this Comment On November 25, 2013, at 9:22 AM, Loxly wrote:

    I spread my 3D stocks across DDD, Exone and Organovo. This technology isn't going to go away.

  • Report this Comment On November 25, 2013, at 10:02 AM, TMFTopDown wrote:

    When most stocks go up 6-10% in a year, going down that amount in one week is pretty significant.

    At the same time, if a stock has tripled in such a short period, 6-10% isn't what I would say is a good deal. You might want might want to be a little more opportunistic about your price and buy only when/if there's been a more sizeable pullback.

    Thanks for your comments!

    Steve Heller

  • Report this Comment On December 28, 2013, at 11:16 AM, DReview wrote:

    Sounds like there are too many companies that are making 3D printing. FIRST OF ALL YOU DON"T NEED A COMPANY.

    Just download the software and learn some programming.

    I think this might be a Trillion Dollar Industry in the grand scheme… But there's not going to be just one company making 3D printing at the moment…. And it looks like everyone is only going to make a couple of million out of this. This isn't the Steam Engine or the Printing Press…

    It's just a bonus. 20 Dollars I can develop a 3D printing from my laptop in a month.

  • Report this Comment On December 28, 2013, at 11:17 AM, DReview wrote:

    So Motley sent me an email… but they never specified which company to invest in. It's kind of pathetic.

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