Please ensure Javascript is enabled for purposes of website accessibility

What Does 2016 Hold for 3D Printing Stocks?

By Beth McKenna – Jan 15, 2016 at 1:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here are five major happenings that could affect 3D printing stocks in 2016.

While none of us have a magic eight-ball that can accurately predict the future, I think 3D printing stocks in general -- including those of the two largest industry players, 3D Systems (DDD 4.57%) and Stratasys (SSYS 2.33%) -- are in for a subpar to flat year in 2016. At best, one or both of the leaders might post small gains, but only because they've been beaten down so much over the last two years that decent bounces are possible.

The major events listed below that could occur in 2016 have the potential to affect 3D printing companies' financial performances and, hence, stock prices.

1. Macroeconomic headwinds in the enterprise space will likely continue

A Stratasys Connex 3D printer for the enterprise market. Image source: Stratasys.

3D Systems and Stratasys have reported that there's been a broad-based decrease in capital spending for 3D printers among industrial customers. Both companies encountered this huge headwind in the first quarter of 2015, and it's continued through their third-quarter earnings reports in November.

Stratasys' management has attributed this major slowdown to overcapacity in the field due to the large number of 3D printers purchased during the previous few years. There's a possibility, however, that some customers are delaying purchases to see what compelling new offerings might soon come to market.

There's no reason to believe this headwind won't continue into 2016. 

2. 3D Systems will get a new CEO
3D Systems has been operating without a permanent CEO since former leader Avi Reichental abruptly exited the company in late October, so a successor will certainly be appointed in 2016. The right CEO could start turning things around for the beleaguered company, though this will be a difficult task. The new CEO will face the headwinds discussed above. He or she will also probably have to deal with the entrance of well-funded competitors into the market. 

Triple D's new leader will also have to handle a host of internal issues: several recent product quality issues, a balance sheet likely bloated with inflated goodwill values from acquisitions (investors should expect big writedowns), and a poor corporate culture, according to Glassdoor ratings and comments.

3. HP will likely enter the 3D printing market
HP (HPQ 2.90%) plans to bring to market in 2016 a 3D printer for the enterprise market that's powered by its compelling Multi Jet Fusion technology, which it unveiled in late 2014. The deep-pocketed 2D printing king claims its printer will be 10 times faster than those powered by the leading 3D printing technologies, while sporting high precision, high resolution, and brilliant color capabilities -- and it will be priced less than the competition.

Tech companies often end up behind schedule for product launches, though, so HP's launch might be delayed until 2017.

3. Carbon3D will probably enter the 3D printing market
Start-up Carbon3D plans to launch in 2016 a 3D printer for the enterprise market that's powered by its potentially game-changing Continuous Liquid Interface Production (CLIP) technology. CLIP harnesses UV light and oxygen to "grow" polymer parts continuously.

Image source: Carbon3D.

CLIP is reportedly 25 to 100 times faster than the leading 3D printing technologies, and its materials possibilities are supposedly immense. Speed and materials capabilities are among the top hurdles holding back 3D printing from making increased inroads into manufacturing applications. So, CLIP has the potential to disrupt the manufacturing sector. Obviously, it could also allow Carbon3D to take business from 3D Systems and Stratasys, not to mention voxeljet, which, like Stratasys, is solely involved in the polymers space.

We don't have to go on blind faith that CLIP is super-speedy. Carbon3D co-founder and CEO Joseph DeSimone wowed the tech world when he demonstrated CLIP at the TED 2015 conference last March. The company has also wowed some big names: It was initially backed by Autodesk; raked in a $100 million funding round led by Google Ventures, Alphabet's venture capital arm; and attracted revered former Ford CEO Alan Mulally to its board of directors.

It's possible that this new product launch could also be pushed back to 2017.

4. More news might come out about Apple's 3D printing plans
A patent application filed by Apple (AAPL 2.56%) for a unique color 3D printer aimed at the consumer market was published in December. This doesn't necessarily mean the consumer tech giant will enter the desktop 3D printing space, but it suggests that it's seriously considering doing so.

What's most unique about Apple's printer concept is that it colors the object being printed while it's being printed. It has two nozzles -- one for extruding the material being printed and the other for applying the coloring agent. The patent also contains an alternative method, which involves coloring the object after it's been printed.

This is the most questionable event on this list, and if Apple does decide to enter the market, it won't happen for some time. If and when it does, Stratasys will surely feel the impact on its desktop unit, MakerBot.

5. Arcam will probably receive another multi-unit order from General Electric
The Swedish industrial metals 3D printing company received an order in December for 10 of its electron beam melting (EBM) 3D printers from Avio Aero, a subsidiary of General Electric (GE 6.20%). Another multi-unit order from the GE subsidiary is almost surely on the horizon. GE will be using EBM systems to 3D-print low-pressure turbine blades out of titanium aluminide for its new GE9X jet engine, as Arcam CEO Magnus Rene confirmed on the company's fourth-quarter 2014 conference call.

Rene has said he doesn't know when General Electric will start production, but that 2017 or 2018 was probable, which means the industrial giant will probably need to ramp up in 2016.

2016 will likely prove to be another challenging year for 3D printing companies in general. Despite the group's beaten-down stock prices, I still think new investors should generally stay away. Very rough waters are likely ahead due to macroeconomic headwinds and the probable entrance of well-funded competitors into the market. 

Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of General Electric Company. The Motley Fool recommends 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

3D Systems Corporation Stock Quote
3D Systems Corporation
$8.92 (4.57%) $0.39
Stratasys Ltd. Stock Quote
Stratasys Ltd.
$14.94 (2.33%) $0.34
Apple Inc. Stock Quote
Apple Inc.
$146.10 (2.56%) $3.65
General Electric Company Stock Quote
General Electric Company
$67.54 (6.20%) $3.94
HP Inc. Stock Quote
HP Inc.
$26.64 (2.90%) $0.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.