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Why Shares of 3D Systems Plunged 17.1% on Monday

By Travis Hoium – Oct 26, 2020 at 10:15AM

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After a strong run, this stock may be running out of steam.

What happened 

Shares of 3D printing company 3D Systems (DDD 5.30%) fell as much as 17.1% in trading Monday after a negative note came out from an analyst. Shares slid throughout the day and closed down 16.8% for the day. 

So what

The culprit of the move was William Blair analyst Brian Drab, who questioned the rally 3D Systems' shares have experienced over the past month. Shares were up 46% in a month going into today, and it appears that a Tesla job posting related to 3D printing and a strong earnings report from Align Technologies had growth stock investors piling into the stock. 

A 3D printer creating a shoe.

Image source: Getty Images.

Whether Tesla or Align Technologies uses 3D Systems' printers or services, this is business as usual and nothing to get too excited about. It isn't as if Tesla is building 3D printed cars and Align is a longtime customer. 

Now what

Sometimes a good story can lead to a lot of hype in a stock, and that appears to be what happened with 3D Systems over the past month. But the reality is that the company's revenue is dropping, and it's losing money year after year. Until the company can turn around its operations, I don't see a reason to buy a dip in the stock. 3D printing may have a bright future, but the industry has proven over and over again that the benefits aren't going to the 3D printer manufacturers themselves. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Align Technology and Tesla. The Motley Fool recommends 3D Systems. The Motley Fool has a disclosure policy.

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