What happened

Tuesday, for the third straight trading day, 3D printing stocks tumbled. By the time the selling was done, contract 3D prototyper Proto Labs (NYSE:PRLB) had closed 5.8% lower, printer maker 3D Systems (NYSE:DDD) fell 9.5%, and Desktop Metal (NYSE:DM) -- a recent special purpose acquisition company (SPAC) IPO and the newest kid on the 3D printing block -- was down 9.7%.

So what

Why did all these 3D printing stocks collapse today? Good question. Next question, please.

I jest, but there really doesn't seem to be any definitive reason for 3D printing stocks to take it on the chin today. No analyst downgrades (or even reductions to price target) are in evidence. There's no negative news on the wires. Even the economy caught sort of a break, with President Trump having signed the second big coronavirus stimulus bill over the weekend, and Congress now considering amendments to triple the amount of direct stimulus payments to taxpayers -- to $2,000 each -- a move that would put more money in consumers' pockets, and therefore presumably stimulate both consumption and production (and, by extension, 3D printing services for producers).

Cartoon characters confused by stock chart arrow falling and crashing into floor

Image source: Getty Images.

Now what

So again, what's with all the selling? It could be investors selling for tax purposes. While far from the biggest gainers on the market this year, these three 3D printing stocks are also far from the worst. Over the past year, Desktop Metal shares are up a stellar 90%, Proto Labs stock has gained a strong 65%, and even 3D Systems put together a 28% gain -- 12 points better than the S&P 500's overall performance this year.

Investors sitting on large capital gains this year may be wanting to sell now, in tax year 2020, rather than wait until 2021, when tax laws may change (and tax rates could rise) under the incoming Biden administration. In the absence of any better explanation for why these three stocks have suffered three straight days of unremitting losses, I suspect "income tax worries" is as good an explanation as any.

And if I'm right? What does that mean for investors then? Don't be surprised if the selling continues for another couple of days, even in the absence of any actual bad news. But the good news is that next week will bring a new trading year -- and a new chance for 3D printing stocks to rise.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.