Shares of 3D Systems (NYSE:DDD), a 3D printing company, tumbled more than 23% this week on seemingly no company-related news. Shares of the tech stock likely fell because one of 3D Systems' rivals made an acquisition that could strengthen its competitive position.
On Monday, Desktop Metal, another 3D printing company, said that it had acquired the Belgium-based company Aerosint, which has developed a proprietary way to layer multiple materials in the 3D printing process.
Desktop Metal said in a press release that "multi-material printing is the next frontier" and that Aerosint's technology "unlocks a range of new use cases" for additive manufacturing (AM).
The CEO of Desktop Metal, Ric Fulop, added that, "This transaction advances our strategy to own differentiated print technologies that enable an expanding set of AM 2.0 applications at scale."
3D Systems' stock fell by nearly 10% after the news was reported on Monday and has continued falling since, indicating that its investors are likely worried that the acquisition could give Desktop Metal an advantage.
Investors should know that 3D Systems' stock can be a bit volatile, and even though its shares are experiencing a huge drop this week, the stock has still gained about 150% year to date.
The company will report its second quarter 2021 results on Aug. 10, which could cause some more volatility in the shares in the coming weeks. But long-term investors should be cautious about making changes to their investing thesis based on minor news or even one quarterly earnings report.