On Tuesday, 3-D printing bears seemed to have capitulated, and shares of 3D Systems (DDD 3.08%), Stratasys (SSYS +3.24%), ExOne (XONE +0.00%), and voxeljet (VJET +0.00%) all traded higher on extremely heavy volume, suggesting a short squeeze could be under way. The day's movement seems to underscore a continued positive shift in short-term sentiment during the past month, in which 3D Systems, Stratasys, ExOne, and voxeljet have traded significantly higher. However, even with all this excitement, there doesn't seem to be any fundamental reasoning behind today's sudden change of heart.
Historically, 3D Systems, Stratasys, ExOne, and voxeljet have been wildly popular with short sellers because the stocks are richly valued and it's easy to subscribe to the belief that the future promise of 3-D printing isn't going to exceed its currently high-priced expectations. As of June 13, short interest in the 3-D printing sector has been extremely high, meaning that there's a high number of open short positions relative to the number of shares outstanding. When short-term sentiment shifts positively, it can create a situation in a heavily shorted stock where the price moves aggressively higher on heavy volume.
|
Company |
Shares Outstanding (millions) |
Short Interest as of June 13 (millions) |
Percentage of Shares Outstanding Sold Short |
|---|---|---|---|
|
3D Systems |
103.5 |
34.0 |
32.9% |
|
Stratasys |
49.3 |
7.0 |
14.2% |
|
ExOne |
14.4 |
3.2 |
22.2% |
|
voxeljet |
10.5 |
1.7 |
16.2% |
Source: Yahoo! Finance, Nasdaq, and SEC filings. Rounded to nearest tenth.
Grasping at straws
If you've done a quick news search about why the 3-D printing sector was moving higher today, you were likely bombarded with a host of different reasons why 3D Systems, Stratasys, ExOne, and voxeljet all moved upward. Bloomberg speculated that because 3D Systems canceled its appearance at a Pacific Crest conference in August, it could mean that the company has entered into quiet period and may be taken over; other companies are simply following suit. Barron's published an article yesterday about how the 3-D printing sector's technical indicators are improving and it may be time get reinvested. Benzinga seems to think that a recirculated article about an advancement in 3-D biological printing could be driving the force behind today's action. Clearly, no one has any real idea why 3D Systems, Stratasys, ExOne, or voxeljet are all popping on the day.
Tuning out the noise
Instead of focusing on day-to-day movements, which can be completely arbitrary and take an emotional toll that drive investors to make bad decisions (like chasing performance), it's better to focus on company-specific events that drive long-term stock performance. In the last 24 hours, the underlying fundamentals of 3D Systems, Stratasys, ExOne, or voxeljet haven't changed, and although it's nice for the sector to rally for no apparent reason, it's merely just noise for us long-term investors.
