Monday, December 22, 2014

Can 3D Printing Stocks Rebound in 2015?

Next year won't be much kinder to 3D printing companies, but we might not see this kind of buying opportunity again.

The performance of the 3D printing industry has been a roller coaster ride for the segment’s top players over the past two years, most notably 3D Systems Corporation (DDD), Stratasys, Ltd. (SSYS), Dassault Systemes (DASTY), ExOne Co (XONE), and Voxeljet AG (VJET).

Some 3D printing stocks rose north of 150% in 2013 as consumers were awestruck by the sudden and spectacular presentation of 3D-printed objects.

Ratings-hungry national media outlets fueled the fire with scandalous and speculative stories involving dangerous 3D printed objects such as plastic guns and weapons. Progressive medical and industrial organizations scrambled to learn more about the possibilities this technology could have for future medicinal ventures.

The result: 3D printing stocks skyrocketed.

The 3-Dimensional Bubble

However, in January 2014, that rocket ran out of fuel and came crashing down, dragging the share prices of those 3D printing companies with it. Since then, it’s been rough going for 3D printing stocks, and none of the five companies mentioned have managed to get back in the black.

While there has been plenty of speculation and discussion among industry analysts and experts as to the cause of the crash, there wasn’t one specific event that caused the decline in 3D printing stocks.

The general consensus is that the whirlwind of excitement and interest in the concept during 2013 simply faded away as people realized 3D printing is more involved and expensive than they originally thought, and when 3D printing vending machines didn’t appear in convenience stores across America.

With the best-performing of these five 3D printing stocks down nearly 40% YTD, and the worst being down more than 80%, it looks like investors have lost all confidence. So, what’s the likelihood that 3D printing could rebound in 2015? Is it possible that any of these stocks will turn around and recoup this year’s losses?

Probably not. The short-lived 3D printing bubble has burst, too many investors have been burned, and the chance of an industry development so monumental that 80% losses are recovered during 2015 is about as likely as winning Mega Millions.

Buying 3D Printing Stocks in 2015

But, does this mean that you should abandon 3D printing stocks altogether? No — quite the opposite. Because the market has had time to correct itself and the concept of 3D printing has had time to settle in, the reality of the sector can be better evaluated.

The possibilities for the future of 3D printing companies can be more accurately analyzed without the significant — and often incorrect — influence from national media outlets and other would-be trendsetters looking to jump on the bandwagon.

With the general public’s attention aimed elsewhere, consider some simple facts and fundamentals of 3D printing and the future of the industry. Canalys reported that global shipments of 3D printers rose 16% year-over-year, last quarter and the 3D printing market will grow to $16.2 billion by 2018. By 2017, IDC expects 3D printers to have a compound annual growth rate of 59% since 2011.

The point is that, while 3D printing stocks may be out of favor, their future in the industry is inevitable. The possibilities involving quick and cheap production of customized plastic items, hard-to-find metal parts for cars and jet engines, and even biomedical revolutions such as 3D-printed tissue and organs — all of that is still on the horizon. Just not tomorrow’s.

This truth is supported by General Electric Company’s (GE) recent announcement of plans to build a $32 million 3D printing facility in Pittsburgh. The company already uses 3D printing technology for select items, and the new facility will expand the realm of possibilities to include all of GE’s products ranging from light bulbs to jet engines.

Hewlett-Packard Company (HPQ) recently unveiled a cutting-edge 3D printing process dubbed Multi Jet Fusion, which is supposedly 10 times faster than other devices currently on the market. Meanwhile, the China Aerospace Science and Technology Corporation announced the development of a 3D printer intended for use by astronauts.

Bottom Line

It might not look like a snowball, as the above is simply a small sampling of announcements related to the advancement of 3D printing. But as more uses for the technology emerge, and more efficient, less expensive materials and processes are developed, adoption of 3D printing will increase. Eventually, the sector will resemble the $16 billion market described by Canalys — the only question is when.

So, consider changing your perspective — all the 3D printing stocks you wanted to buy last year are now on sale for bargain basement prices. Picking up a small basket of 3D printing companies while they’re this low could end up being a wise move down the road. Of course, it’s possible that not all of the 3D printing stocks you choose will increase in value, but the winners might outperform the ones that don’t.

If you’re looking for quick gains with 3D printing stocks, you won’t find them. But if you’re looking to add some speculative flavor to an otherwise boring medium-term tech portfolio, 3D printing stocks could be the spice you need.

Article originally appeared on (12/22/14)

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