Why 3-D Printing Stocks Continued to Skyrocket Today

On Tuesday, 3-D printing bears seemed to have capitulated, and shares of 3D Systems (NYSE: DDD  ) , Stratasys (NASDAQ: SSYS  ) , ExOne (NASDAQ: XONE  ) , and voxeljet (NYSE: VJET  ) all traded higher on extremely heavy volume, suggesting a short squeeze could be under way. The day's movement seems to underscore a continued positive shift in short-term sentiment during the past month, in which 3D Systems, Stratasys, ExOne, and voxeljet have traded significantly higher. However, even with all this excitement, there doesn't seem to be any fundamental reasoning behind today's sudden change of heart.

DDD Chart

DDD data by YCharts

Historically, 3D Systems, Stratasys, ExOne, and voxeljet have been wildly popular with short sellers because the stocks are richly valued and it's easy to subscribe to the belief that the future promise of 3-D printing isn't going to exceed its currently high-priced expectations. As of June 13, short interest in the 3-D printing sector has been extremely high, meaning that there's a high number of open short positions relative to the number of shares outstanding. When short-term sentiment shifts positively, it can create a situation in a heavily shorted stock where the price moves aggressively higher on heavy volume.

Company

Shares Outstanding (millions)

Short Interest as of June 13 (millions)

Percentage of Shares Outstanding Sold Short

3D Systems

103.5

34.0

32.9%

Stratasys

49.3

7.0

14.2%

ExOne

14.4

3.2

22.2%

voxeljet

10.5

1.7

16.2%


Source: Yahoo! Finance, Nasdaq, and SEC filings. Rounded to nearest tenth.

Grasping at straws
If you've done a quick news search about why the 3-D printing sector was moving higher today, you were likely bombarded with a host of different reasons why 3D Systems, Stratasys, ExOne, and voxeljet all moved upward. Bloomberg speculated that because 3D Systems canceled its appearance at a Pacific Crest conference in August, it could mean that the company has entered into quiet period and may be taken over; other companies are simply following suit. Barron's published an article yesterday about how the 3-D printing sector's technical indicators are improving and it may be time get reinvested. Benzinga seems to think that a recirculated article about an advancement in 3-D biological printing could be driving the force behind today's action. Clearly, no one has any real idea why 3D Systems, Stratasys, ExOne, or voxeljet are all popping on the day.

Tuning out the noise
Instead of focusing on day-to-day movements, which can be completely arbitrary and take an emotional toll that drive investors to make bad decisions (like chasing performance), it's better to focus on company-specific events that drive long-term stock performance. In the last 24 hours, the underlying fundamentals of 3D Systems, Stratasys, ExOne, or voxeljet haven't changed, and although it's nice for the sector to rally for no apparent reason, it's merely just noise for us long-term investors.

Warren Buffett: This new technology is a "real threat"
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.


Read/Post Comments (1) | Recommend This Article (13)

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 July 01, 2014, at 11:41 PM, cpick79 wrote:

    To me it seems like Organovo (ONVO) is company currently closest to advancing real 3D Bio-printing technology. They also just got decent praise by Roche for already 3D bio printing Liver cells.

    I would lay off the shorts on this one, esp if sector is on up and up. until a move over 9.10 resistance. Then after run to 11 or so ...I may try to short . But right now...given speculaton money in market this one at it's current level seems too risky except as a long w near 7.5 or perhaps tighter below 8.

Add your comment.

DocumentId: 3015299, ~/Articles/ArticleHandler.aspx, 7/30/2014 9:24:45 AM

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