Understanding the Threat of Commoditization Facing 3-D Printing Stocks

After attending the Inside 3D Printing Conference in New York City, it quickly became apparent that the consumer 3-D printing space has become overcrowded. Companies such as 3D Systems (NYSE: DDD  ) and Stratasys (NASDAQ: SSYS  ) are beginning to have a difficult time differentiating their latest and greatest consumer-oriented printers from the competition. As a result, the consumer 3-D printing industry is poised to face pricing pressures in the years ahead.

Although commoditization is a great dynamic for 3-D printing users because lower prices should help driver higher adoption rates, it'll likely produce profitability headwinds for 3D Systems and Stratasys. The good news for investors in the two companies is that the consumer 3-D printer space remains a relatively small percentage of the entire 3-D printing industry today, meaning the threat of commoditization should have a small impact on 3D Systems' and Stratasys' overall business for the time being.

Additionally, if 3D Systems or Stratasys face more severe pricing pressures in the years ahead, the hope is that they'll be able offset the decline through steady revenue from the sale of highly profitable materials, which are consumed when the printers are in operation. Of course, the price of plastic feedstock for consumer 3-D printers may also face pricing pressures in the future.

In the following video, 3-D printing specialist Steve Heller and industrials analyst Blake Bos discuss the threat of commoditization in the 3-D printing landscape and what that could mean for investors. Going forward, investors should monitor gross profit margins at 3D Systems and Stratasys to determine if commoditization is becoming a more severe threat.

Must-own stocks for the Third Industrial Revolution
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And everyone from BMW, to Nike, to the U.S. Air Force is already using it every day. Watch The Motley Fool's shocking video presentation today to discover the garage gadget that's putting an end to the Made In China era... and learn the investing strategy we've used to double our money on these 3 stocks. Click here to watch now!


Read/Post Comments (0) | Recommend This Article (2)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2944011, ~/Articles/ArticleHandler.aspx, 9/18/2014 12:00:28 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement