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Why Proto Labs Stock Dropped Tuesday

By Howard Smith - Updated Feb 23, 2021 at 4:01PM

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The company was caught up in a broader move away from higher-growth tech companies.

What happened

Shares of machining, injection-molding, and 3D printing company Proto Labs (PRLB 1.26%) had a volatile day Tuesday. After losing more than 16%, the stock halved those losses, ending today 7.4% lower. 

So what

The company didn't put out any specific news, but the stock is more likely caught in the overall rotation out of higher-growth tech names, and into cyclical and recovery stocks. Shares of Proto Labs are down almost 40% from recent highs near the end of January. But the drop just brings shares to about breakeven year to date.

cnc machining a part

Image source: Getty Images.

Now what

Proto Labs continues to recover from a difficult business environment in 2020. Revenue for its fourth quarter 2020 was down slightly year over year. Full-year revenue was also lower compared to 2019. But the company still generated $107 million in cash from operations for the year. CFO John Way said in the earnings release, "2020 was the most difficult backdrop our business has ever faced, yet our digital manufacturing model continued its strong cash flow generation."

That cash flow enabled the company to grow its cash position by about 10% from the previous quarter, ending the year with $221 million in cash and investments. The most recent drop in shares seems more related to the market shift away from high tech growth stocks. Today appears to be no exception.

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