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Why Desktop Metal Stock Exploded 24% Higher Today

By Rich Smith – Nov 1, 2021 at 5:01PM

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And why it pulled 3D Systems and ExOne stocks higher along with it.

What happened

Shares of 3D printing company Desktop Metal (DM -0.56%) soared ahead to close up 23.8% on Monday, creating an updraft that pulled along just about everyone who is anyone in the sector:

  • Stratasys (SSYS -0.22%) -- up 7.8%;
  • ExOne (XONE) -- up 11.1%; and
  • 3D Systems (DDD 5.52%) -- up 12.3%!
Four wavy arrows zooming up.

Image source: Getty Images.

So what

What was it about Desktop Metal today that got everyone so excited about 3D printing stocks again?

In a press release today, Desktop Metal announced the opening of a new facility "to meet demand for the world's fastest metal 3D printing technology." The company says that it will triple the manufacturing capacity of its P-50 printing systems. "We are experiencing growing, pent-up demand for our Production System P-50 solution," explained Desktop Metal CEO Ric Fulop.  

Now what

Admittedly, the fact that one 3D printing company is growing rapidly in the face of strong demand does not necessarily mean that all 3D printing companies are enjoying similar growth. In fact, it would be just as reasonable for investors to surmise that rapid growth in demand for Desktop Metal products might be coming at the expense of demand for competing printers from Stratasys, for example -- or from ExOne, or from 3D Systems.

That being said, this doesn't seem to be how investors are reacting to the news. Instead, they appear to be extrapolating from Desktop Metal's announcement that demand for 3D printing services, and for 3D printers, is booming as the economy emerges from the pandemic -- and that this will be good news for all 3D printing stocks.

Are they right? Was today a good day to buy all 3D printing stocks on the back of good news from just one of them? We'll soon find out, because:

  • ExOne is expected to report earnings on Wednesday. Analysts are forecasting a loss of $0.22 per share.
  • Next up will be Stratasys reporting on Thursday. Street forecasts see a smaller loss here -- just $0.06 per share.
  • Then we'll have a small reprieve before 3D Systems reports on Nov. 8. With luck, 3D will break the string of bad news. Analysts think it could earn as much as $0.05 per share.
  • Finally, Desktop Metal itself will report one week later, on Nov. 15. Analysts are forecasting a $0.09-per-share loss for the company, but as we've already discussed, that doesn't seem to scare shareholders one bit.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends 3D Systems. The Motley Fool has a disclosure policy.

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