What happened

Shares of 3D-printing companies rose sharply on Thursday after 3D Systems (NYSE:DDD) reported blockbuster preliminary results for the fourth quarter. The company said that it had completed the sale of its Cimatron and GibbsCAM software businesses and expects revenue for the period to be in the range of $170 million to $176 million. This news has given investors hope that other companies in the sector will report similarly strong results.

As of about 2 p.m. EST, here's how prominent 3D-printing stocks were trading:

A 3D printer

Image source: Getty Images.

So what

The 3D-printing sector was hit hard by the COVID-19 pandemic and is expected to have contracted by nearly 20% in 2020. Supply chains were disrupted and manufacturing slowed due to the public health crisis, which reduced demand for 3D-printing products and services.

For example, in the first three quarters of 2020, Stratasys's total revenue fell by more than 20% year over year. The industrial company was also forced to record a non-cash goodwill impairment charge of $386.2 million in the third quarter related to its FDM and PolyJet technologies due to the pandemic's impact on the business. More recently, Stratasys just closed  its $100 million acquisition of Origin, which had been announced last month. Stratasys expects Origin's software-centric additive manufacturing offerings to contribute up to $200 million in incremental annual revenue to its top line within five years.

Nano Dimension has already been rallying meaningfully in recent months. The company's top line was also crushed during much of 2020, with revenue down by 72% year over year in the first three quarters. Nano Dimension has been conducting numerous direct offerings to raise cash and strengthen the balance sheet enough to navigate the crisis, most recently a $250 million deal at the end of December. The company sold 33.3 million American Depository Shares (ADS) at a price of $7.50 apiece.

Desktop Metal is relatively new to the public markets. It went public in late 2020 after merging with special purpose acquisition company (SPAC) Trine Acquisition. That deal was announced in August and closed in December. Desktop Metal is much smaller than its peers. It generated just $26.4 million in revenue in 2019, and is expected to report total revenue for 2020 in the range of $15 million to $25 million. Management has made rosy forecasts for its future, however, predicting that it will enjoy a compound annual growth rate (CAGR) of 87% through 2025.

Now what

The strong preliminary results from 3D Systems are sparking investor optimism that the 3D-printing industry is about to come roaring back as manufacturing activity picks up and economies start to recover from the havoc caused by the pandemic.

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