3D printing has been hailed as the catalyst for a new industrial revolution, but so far it’s failing to impress investors with its long term corporate potential – which could have catastrophic implications for its long term future. Here’s three things causing concern:
1. Short selling interest in the world’s five listed 3D printing companies – 3D Systems, Exone, Voxeljet, Stratasys and Proto Labs – has risen 15 per cent this year alone, according to data provider Markit, indicating investors are taking a pretty large punt on 3D printing shares tumbling.
2. Part of the problem is the perilous earnings of these companies. Most, with the exception of Exone, which yesterday posted a surprise loss, have lived up to analysts’ expectations this earnings season – but it’s the long term potential which has caused market jitters.
Markit analysts say most analysts covering 3D printing stocks have cut their profit guidance for the rest of the year, due to falling earnings margins.
3. This has hit the share price of the five listed 3D printing firms, particularly 3D Systems’, as this graph shows.
While investors may not have given up on 3D printing just yet – there is even a 3D printing tracker fund called the Global Robotics & Automation ETF which has seen assets double over the past year – the industry still needs to prove it's a solid business proposition rather than a flash in the pan.
Naysayers will point the fact it's a nascent industry and the listed sector fails to give an accurate reflection of the industry.
But business is business, and if the embryonic 3D printing firms are failing to convince investors of their long term potential, this year’s share price stumble could be the canary in the mine shift for the wider 3D printing industry.