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Why Stratasys Stock Sank 6.5% on Thursday

By Rich Smith - Updated May 14, 2020 at 11:48AM

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Losses were nearly four times worse than feared.

What happened

Shares of Stratasys (SSYS -1.18%) cratered after the company reported first-quarter earnings this morning, falling more than 11% before rebounding to about a 6.5% loss as of 11:15 a.m. EDT.

The 3D printer maker reported its fiscal Q1 2020 earnings today, and the company's $0.19 per share pro forma loss was nearly four times as bad as the $0.05 loss that Wall Street was expecting. Stratasys' $132.9 million in quarterly sales likewise fell short of Street expectations for $136.5 million.  

3D printer

Image source: Getty Images.

So what

What's worse, when calculated according to generally accepted accounting principles (GAAP), Stratasys' quarterly loss was at least twice as bad as the pro forma number made it seem.  

In Q1, Stratasys stock lost $0.40 per diluted share on a GAAP basis, or 10 times the money lost in last year's Q1. Sales declined more than 14% year over year, with management blaming "primarily ... the adverse impact of COVID-19 on the company's customers throughout the industries into which the company sells its products and services."

Now what

And yet management struck an optimistic note in guiding investors on what to expect next. Although the company lost money and suffered a gross margin decline to 45% (from 49.2% a year ago), this was "due primarily to the lower proportion of hardware and consumables out of the total revenue mix due to the COVID-19 crisis, not to discounting or material ASP reductions." Management withdrew financial guidance for this year, and gave no specific new guidance, but said "the company strongly believes that gross margins will return to their recent levels as the economy recovers."

In the meantime, CEO Yoav Zeif insists that Stratasys is "well prepared to manage the downturn with a strong balance sheet [boasting] $325 million in cash and equivalents and no debt."

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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