Why Shares of 3D Systems Corporation Melted Down Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of 3D Systems  (NYSE: DDD  ) fell 11% Wednesday after the additive manufacturing specialist surprised investors with another dilutive stock offering.

So what: This time, 3D Systems offered 5.95 million shares of common stock for estimated gross proceeds of $317 million, or an average of $53.28 per share. 3D Systems also granted the underwriter a 30-day option to purchase up to 892,500 additional shares.

Now what: Despite the latest dilution, I can't blame management for raising capital now, with shares trading at a steep 10.5 times trailing 12-month sales and 42 times next year's estimated earnings. Remember that 3D Systems raised roughly $250 million in the same fashion this time last year to help fund its growth-by-acquisition strategy. The stock has risen nearly 30% since then, more than making up for the additional shares. For patient long-term investors, I think today's pullback represents another great opportunity to open or add to a position in 3D Systems.

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  • Report this Comment On May 29, 2014, at 10:21 AM, OKwarrior wrote:

    If they had the bright future that the BULLS have been hyping they should (and would) be buying back shares now. I think the reality of the underlying lack of value is starting to show.

  • Report this Comment On May 30, 2014, at 12:38 PM, leradron wrote:

    buying shares back is something that big companies with lots of cash does. small companies that are trying to grow raise capital.

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Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

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8/31/2015 1:49 PM
DDD $13.97 Up +0.49 +3.64%
3D Systems CAPS Rating: ****