There were countless newsworthy happenings in the dynamic 3D printing industry in 2015. Our readers are investors, so this article's focus is on the publicly traded space, particularly industry leaders 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS), including potential significant threats to them. As might be expected by the generally terrible stock-price performances of the 3D printing stocks for the second consecutive year, there was much bad news for the existing industry players.
Here are the key events -- in roughly chronological order -- in the 3D printing industry in 2015.
1. Stratasys' MakerBot implodes
Stratasys' desktop 3D printing unit, MakerBot, imploded in 2015. Its year-over-year sales growth, which had been robust since Stratasys acquired it in 2013, plummeted starting in the fourth quarter of 2014, and Stratasys posted much worse than expected financial results in 2015. Additionally, Stratasys took goodwill impairment charges for MakerBot in 2015 totaling somewhere between $436 million and $476 million, more than the $403 million it initially paid for the company.
The trigger for the sales drop was a widespread issue involving faulty extruders on the fifth-generation Replicator released in 2014. MakerBot sales were probably going to slow, since consumer-targeted 3D printers aren't ready for prime time. However, the release of the new model while it still had significant bugs surely moved up the time frame of a slowdown and intensified the drop-off in sales.
2. Major macroeconomic headwinds affect the enterprise space
3D Systems and Stratasys encountered a particularly weak enterprise 3D printer market starting in the first quarter of 2015 and continuing to date.
Stratasys has attributed this major slowdown in purchasing among industrial customers to overcapacity in the field because of the large number of 3D printers purchased during the previous few years. The company has stated that it doesn't have any indication that businesses are holding off purchasing new printers to see what compelling new offerings might come to market in the near future. I think it's probable that at least some entities, especially those with relatively small capital expenditure budgets, are delaying their purchasing decisions. Doing so isn't risky because of the availability of 3D printing services.
3. Carbon3D makes a splash with its CLIP technology
Start-up Carbon3D made a splash in the technology world when co-founder and CEO Joseph DeSimone unveiled and demonstrated the company's Continuous Liquid Interface Production 3D printing technology at the TED 2015 conference.
CLIP harnesses UV light and oxygen to "grow" polymer parts continuously at speeds reportedly 25 to 100 times faster than the leading 3D printing technologies, according to independent tests commissioned by Carbon3D. Along with speed, its other compelling features -- notably, its reportedly immense materials possibilities -- means that CLIP has the potential to disrupt the manufacturing sector. That's because speed and materials capabilities are two of the primary hurdles holding back 3D printing from making increased inroads into manufacturing applications.
4. 3D Systems CEO Avi Reichental exits the company
In late October, soon before 3D Systems was scheduled to report its third-quarter 2015 results, the company announced then-CEO Avi Reichental's immediate departure.
Reichental's 12-year tenure at the helm of 3D Systems garners mixed reviews, but quite negative ones in recent years, primarily for the company's seemingly undisciplined Pac-Man-like approach to acquisitions. 3D Systems has an opportunity to turn things around if the right CEO comes on board, though this will be very challenging. Corporate culture, which is notoriously slow to change, apparently needs to significantly improve. The company's overall Glassdoor rating is 2.3 (out of 5), while only 28% approved of Reichenthal, and a mere 26% would recommend 3D Systems to a friend.
5. Stratasys takes huge goodwill impairment charge on enterprise business
Stratasys announced when it reported its third-quarter results in November that it's writing down about $730 million to $770 million on the enterprise side of its business. It also said the size of this charge could change. This means that Stratasys has overvalued its acquisitions in the enterprise space, just as it did with MakerBot in the consumer (and related) market.
This marks the first goodwill impairment charge in the enterprise realm for either of the two leaders. It's a near certainty that investors are going to see some similar huge writedowns by 3D Systems once a new CEO comes on board, in my opinion.
6. Apple's patent application for a 3D printer is published
An Apple (NASDAQ:AAPL) patent application for a unique color 3D printer aimed at the consumer market was published in early December. While this doesn't necessarily mean that the consumer-tech behemoth will enter the 3D printing market, it certainly means that it's seriously exploring doing so.
The primary thing that's unique about the printer in Apple's patent application, which was submitted in May 2014, is that it colors the object being printed while it's being printed. It accomplishes this feat via 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.
If Apple enters the desktop 3D printer market, investors can expect MakerBot's woes to increase.
7. 3D Systems pulls out of consumer market
Just before bidding farewell to 2015, 3D Systems said adios to the consumer market. The company announced that effective immediately, it was discontinuing production of the Cube, its sole consumer-targeted 3D printer, and closing its consumer platform, Cubify.com, on Jan. 31.
Triple D said in its press release that it's pulling out of the consumer market so management can focus its resources on areas that present near-term opportunities and profitability, which it views as being within the enterprise market. Upon discontinuing production of the Cube, 3D Systems expects revenue to be negatively affected by less than 2% and profitability to improve.
This was a good move, in my opinion, and apparently one that the board felt very strongly about, since it didn't wait for a new CEO to come on board to weigh in on the decision.
3D-printing a wrap...
Given these major happenings in the 3D printing space in 2015, I think it's likely that 3D Systems and Stratasys, as well as some of the smaller players, are going to have a very challenging 2016.
Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. 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.
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