3-D Printing Stocks Crushed as Dow Jones Falls

Shares of all major 3-D printing stocks tumbled on Wednesday as the Dow Jones slumped.

Feb 5, 2014 at 11:20AM

The Dow Jones Industrial Average (DJINDICES:^DJI) was down 20 points as of 11:30 a.m. EST. Intel (NASDAQ:INTC) was down 0.25% in late-morning trading, while shares of 3-D printing stocks 3D Systems (NYSE:DDD), voxeljet (NYSE:VJET), and Stratasys (NASDAQ:SSYS) were notable decliners.

ADP comes in below expectations
Perhaps helping to fuel the Dow Jones' drop,  ADP employment data came in below expectations early on Wednesday. According to the company's payroll numbers, the U.S. added 175,000 private sector jobs last month, a bit short of the 180,000 economists had anticipated.

ADP data isn't considered the definitive method for evaluating the U.S. labor market, but a weaker than expected reading should be taken as a poor sign. Still, investors will have to wait for Friday's official Labor Department nonfarm payroll report to get a more accurate assessment of the job market.

Intel leads Dow Jones lower
Intel was down despite a lack of news affecting the company. On Tuesday, Bernstein Research reiterated its underperform rating on Intel, lamenting that the chipmaker's efforts at breaking into the mobile market were unlikely to reward shareholders.

Intel is attempting to build market share in the tablet space, but it is sacrificing profits to do so. In order to get its chips into more tablets, Intel is offering them to tablet makers at far reduced prices.

3D Systems' warning sparks sector sell-off
But Intel's sell-off was nothing compared to 3D Systems, which shed about one-fifth of its value in early trading. Shares of other stocks in the sector, notably Stratasys and voxeljet, were falling in tandem with 3D Systems, as investors may have been projecting 3D Systems' weakness onto other companies in the space.

3D Systems reduced its fiscal 2013 earnings-per-share estimate from $0.93-$1.03 to $0.83-$0.87 -- a fairly significant reduction, particularly because analysts were looking for the company to post earnings of about $0.96 per share.

The reduction in profit guidance was all the more notable given 3D Systems' high valuation. Even with the sell-off, 3D Systems shares are still trading with a price-to-earnings ratio near 130, many times greater than the broader market. Investors are clearly looking for strong growth in the space, with revenue and profitability increasing at a rapid rate. Any disappointment is likely to be met with heavy selling.

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Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends 3D Systems, Intel, and Stratasys. The Motley Fool owns shares of 3D Systems, Intel, and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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Jun 12, 2015 at 5:01PM

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