Shares of 3D Systems (DDD 2.45%) plummeted 28.8% in November, according to data from S&P Global Market Intelligence. For some context, shares of the 3D printing company's main rival, Stratasys, declined just 3.2%, while the S&P 500 returned 3.1%.
3D Systems stock is down 33.6% in 2017, through Nov. 30, while Stratasys stock is up 31.7% and the broader market has returned 20.5%.
On Oct. 31, 3D Systems reported poor third-quarter earnings and withdrew full-year 2017 guidance. On Nov. 1, the market sent shares tumbling to a closing loss of nearly 24%, accounting for the lion's share of the loss during the month.
In the third quarter, 3D Systems' year-over-year revenue slid 2.2%, and it posted a loss per share of $0.20, whereas Wall Street was looking for earnings per share (EPS) of $0.12. 3D Systems' earnings were negatively impacted by a $12.9 million inventory writedown, execution issues across several geographies, and pricing pressure across several businesses.
The market hates uncertainty, so 3D Systems' withdrawal of 2017 guidance was likely a bigger factor in the stock's thrashing than the weak earnings. The company said that legacy quality and reliability issues have proven to be deeper and broader than management had previously realized, which makes providing an outlook difficult.
Investors should view 3D Systems' 2018 guidance with healthy skepticism, and look for hard evidence that things are turning around. Such evidence would come in the form of improving quarterly earnings and announcements of sales of the company's new Figure 4 system aimed at production applications.