Proto Labs was the first to surprise the rapid prototype industry, posting a decline in third-quarter net income and expecting about a 20% drop in earnings per share for the fourth quarter. Competitive pressure and very little growth are starting to hurt the industry, which will trickle down to 3D Systems.
GE also abandoned its attempt to buy SLM Solutions, which led to speculation that 3D Systems won't be acquired, either. Investors speculating on a potential buyout sold out of the stock.
If the 3D printing industry is in for slow growth, or even contraction, it would be bad news for 3D Systems. The company is losing money as it is and needs to have future growth to turn the bottom line around.
Investors might want to be cautious about the future of the 3D industry right now, because if a broad decline is in store, it will hurt everyone. And without profits to fall back on, 3D Systems might be hurt more than most.
Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Proto Labs. The Motley Fool recommends 3D Systems. 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.