Industry watchdog Wohlers Associates recently issued a note saying that it believes that increased competition and the expiration of patents will eventually cause 3-D printing material prices to fall. This scenario would put 3-D printing giants Stratasys (NASDAQ:SSYS) and 3D Systems (NYSE:DDD) at risk, because selling consumable materials at lush profit margins is key to their businesses. For investors in these companies, declining material prices would certainly put profitability in jeopardy and pose a threat to the long-term investment thesis.
However, 3-D printing expert Rich Stump of FATHOM, a highly experienced Stratasys reseller and 3-D printing service center, believes that while Wohlers Associates' theory may be true in the lower-end, much smaller consumer segment, the higher-end professional market is likely to experience the opposite effect. Stratasys and 3D Systems are constantly developing new materials with advanced properties and will likely keep prices high for the foreseeable future, Stump argues. And unless professional customers want to void their warranties, they're going to use consumable materials sold from the 3-D printing manufacturer -- at a price that the manufacturer sets.
Of course, if 3-D printing material prices rise in the future, as Stump believes is likely, the prospects for profitability for Stratasys and 3D Systems could be greatly improved. In the following video, 3-D printing analyst Steve Heller sits down with Rich Stump to get an insider perspective on material prices.
Steve Heller owns shares of 3D Systems. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool owns shares of 3D Systems and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.