Shares of 3D Systems Corporation (NYSE:DDD) have jumped a whopping 70.1% so far in 2018, according to data provided by S&P Global Market Intelligence, as financial performance finally started to improve. In the second half of the year, the company will need to prove the performance will continue.
The 3D printing business has been in a funk for the last three years and 3D Systems has seen revenue stagnate and financial losses mount. In the first half of 2018, there were at least some signs that a reprieve is on the way.
First-quarter revenue was up 6.1% to $165.9 million and non-GAAP loss shrunk by half to $0.03 per share. Investors are looking for even the smallest signs that operations are going to turn around in 2018 and the early results were enough to send share prices higher.
As impressive as 3D System's stock performance has been in 2018, keep in mind that shares are bouncing off an extreme low and are still down 83% from the start of 2014. Investors are speculating that we're at the beginning of a turnaround, but if that doesn't hold true, the stock could reverse all of its gains very quickly. I will be watching revenue growth and gross margins in the second half of the year to see if there's demand for the company's products and for any pricing power to maintain margins. If either lose momentum, the stock's recovery could be short lived.