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3D printing stocks were among the top performers in 2013, sparking a huge interest among investors. However, their performance this year has been disappointing due to weak outlook and concerns over competition. However, the outlook for 3D printing market is bullish. The key for investors is to focus on the long-term when it comes investing in 3D printing stocks.
Rally in 3D Printing Stocks
3D printing stocks like Organovo (ONVO) , Camtek (CAMT) , and ExOne (XONE) were among the best performers in the overall market in 2013. Shares of Stratasys Ltd. (SSYS) gained nearly 73% last year. Camtek gained over 190%. The performance of 3D Systems Corp. (DDD) was even better, gaining almost 173%. Voxelget AG (VJET) gained more than 37% last year. ExOne Co. (XONE) shares rose more than 100%. Organovo gained more than 316%.
3D Printing's Pullback in 2014
In sharp contrast to the performance in 2013, the performance of 3D printing stocks in 2014 has been disappointing. Year-to-date, shares of all major 3D printing companies are down sharply. Among the worst performers have been 3D Systems, which is down more than 37%, and Voxelget, which is down more than 54%. ExOne shares have fallen nearly 42% in 2014 so far.
One of the reasons for pullback in 3D printing stocks has been concern over increased competition after PC maker Hewlett-Packard (HPQ) announced that it will enter the market. HP CEO Meg Whitman said in an interview with CNBC last month that the company is focused on business 3D printing and not consumer 3D printing. Whitman told CNBC’s Jim Cramer that HP will announce a 3D printing technology at the end of this year. The company thinks there is a real opportunity here, she added.
HP’s entry into 3D printing market will certainly increase competition. And given the fact that the company has significant resources when compared to other players in the 3D printing market, one can expect it to dominate.
Another reason why 3D printing stocks have struggled so far this year is due to disappointing outlook. Earlier this year, 3D Systems shares tumbled after the company lowered its earnings outlook for the full year. The company slashed its adjusted earnings forecast to $0.83 per share to $0.87 per share from previous forecast of $0.93 per share to $1.03 per share. 3D Systems is not the only company in the 3D printing space to give a cautious outlook. ExOne also lowered its revenue outlook, while Stratasys has also given a mixed outlook.
Not surprisingly, 3D printing stocks have struggled this year. But, investors should look at the pullback as a good opportunity to give. Indeed, after valuations soared last year, the sharp pullback in 3D printing stocks is welcome. Also, the long-term outlook for 3D printing companies is robust.
Robust Long-Term Outlook for 3D Printing Stocks?
According to research firm Canalys, the 3D printing market could be worth as much as $16.2 billion by 2018, given the rate at which it is growing at the moment. In 2013, the market was worth $2.5 billion and is expected to reach $3.8 billion by the end of this year.
Tim Shepherd, senior analyst at Canalys, noted that the 3D printing market is still in its infancy. Shepherd expects to see new major entrants making a significant impact in the industry in the coming years, including giants such as HP.