3D Systems Corporation: "I shorted more on the way down"

Too bad there's no saying that goes: "What goes down, must come up." At least that would give shareholders of 3D Systems  (NYSE: DDD  ) something to hold on to.

It's been a rough 2014 so far for owners of 3D Systems as shares of its stock have tumbled nearly 50%. While seemingly outrageous valuations have been the norm for 3D Systems and its 3D-printing brethren, the promise of massive future industry growth kept investors confident during the stocks' crazy run over the past few years.

But now many of those same investors are having second thoughts and abandoning the high fliers.

Whitney Tilson isn't one of them. He didn't own 3D Systems during the torrid upswing, and he doesn't own it now. In fact, Tilson's hedge fund, Kase Capital, is short 3D Systems stock and has shorted even more of the stock as it's plunged.

How ugly could it get? Tilson pegs the company's per-share intrinsic value at just $10 -- which suggests significant further downside from today's near-$50 price tag.

In the video below, Tilson outlines his case against 3D Systems. A transcript follows the video.

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Tilson: The stock went from $10 to $100, and I was short it from $60 on up, and kept pounding the table and warning people.

Really, the peak of it was at the Consumer Electronics Show in Vegas in January. I was out there and they announced that they had just appointed a new creative director, will.i.am, the singer. I said, "This is the sign of a top."

Koppenheffer: That's the jump the shark moment, right there.

Tilson: Yes, exactly, and sure enough that day was the stock's peak at $98. Today it's down more than 50%, three-four months later. I just feel bad for the retail investors who got sucked into a giant promotion.

At that point it was trading at something like 20x revenues. I actually posted an article about this -- will.i.am, and this is the sign of a top -- on one of the websites, and someone in the message board said, "Oh, Tilson doesn't know what he's talking about. It's a good company; it's only trading at 20x earnings."

I slapped my head and I said, "That's the problem here. There are people being drawn into this stock who don't understand the difference between 20x earnings and 20x revenues.

Koppenheffer: Kind of a big difference.

Tilson: That's all the difference in the world.

By the way, I haven't covered a share. I shorted more on the way down at $60, stock's in the $40s today. I think intrinsic value is $10. It's not a fraud -- it's not going to $0.

Koppenheffer: There's a business there.

Tilson: Yeah, and it's probably worth 2 to 3x revenues, so my price target is $10. Now, there's enough hype around it that I'll probably cover most of it before it really gets down there, because once it gets down to a low level, you never know. It can get promoted back up, so as a short sell you can't be too greedy.


Read/Post Comments (7) | Recommend This Article (11)

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 May 17, 2014, at 1:04 PM, Hibiscusanole wrote:

    Some people avid the happiness effect of eating chocolate. Lots of people will but 3D chocolate printers. It is a chocolate stock. Where else do you read about medical miracles on a regular basis?

    China has a printer that makes 10 houses a day.

    I gave it up last year at $48, bought it back at $63, and am happier enjoying the stories and wanting it to grow than feeling jealous and wanting to be a correct bear. Poverty stricken people are actually in danger of being munched by alligators when they have no homes. Cheap buildings are needed in undeveloped countries.

  • Report this Comment On May 17, 2014, at 8:00 PM, Aquaman65 wrote:

    Thanks Motley Fool for putting me on to this stock, hyping this stock, and bringing on short sellers. No really, thanks.

  • Report this Comment On May 18, 2014, at 11:39 PM, uyutnaya wrote:

    Motley Fool disappoints many investors-members by switching from 'buy' to 'short'.

  • Report this Comment On May 20, 2014, at 10:43 AM, anindakumars wrote:

    This is an entirely new industry segment, and I strongly believe everyone who holds the stock today (no matter whatever the cost basis) will return a multi-bagger in a decade's time, probably more. I cannot imagine why the 3D stocks will not handsomley outperform the market. The only way up is north.

  • Report this Comment On May 20, 2014, at 3:11 PM, rrgems wrote:

    Wow, Motley Fool! I'm sure Tilson is very happy you obliged him by publishing his predictions backed by absolutely no facts or statistics. Since when do you publish articles by just some guy, even if he does have a hedge fund, who just says, "I think the price is going down" or "I think the price is going up"???? How about some facts?

    I thinking I may be canceling my Foolish subscription...

  • Report this Comment On May 21, 2014, at 10:50 AM, OLDFLAME wrote:

    Very disappointed with Motley fool. Their hype is nothing but age old trick of "tempt and cheat". They don't know what they are talking about. Forget DDD, I will be reporting to BBB.

  • Report this Comment On May 21, 2014, at 7:10 PM, TruffelPig wrote:

    The Motley Fool is like a giant paranoid schizophrenic institution. The call it multiple opinions - I think its dangerous and confusing.

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