3D Printing Sector will Witness More Downside

The 3D printing industry has provided one of the best shorting opportunities for the investors over the last few years. I was seriously appalled by the meteoric rise of 3D printing stocks, which is why I have been recommending investors to short the stocks across the whole industry. The 3D printing stocks recently touched their all-time lows and with the stocks down considerably from their all-time highs, many investors may be betting on a turnaround.

Betting on a turnaround of a company can be a lucrative investment, however investors tend to get greedy and ignore the shortcomings of such companies.

A turnaround is a rare phenomenon and investors should be very cautious while buying a stock that appears cheap. As for 3D printing stocks like 3D Systems (DDD), Stratasys (SSYS), Voxeljet (VJET), ExOne (XONE), and Organovo (ONVO), I still think these stocks are not good turnaround candidates. In fact, I believe the whole sector still has more room to fall, which is why I’d recommend investors to short these stocks.

Over the last few years, I have highlighted multiple shortcomings of the 3D printing technology. These include high time consumption, poor quality, high price, etc. While 3D printing has improved a little over the last two years, the technology still has those shortcomings. In addition, these are a few additional flaws that I haven’t thrown light on before like high energy consumption, and unhealthy air emissions. Studies have shown that 3D printers consumer about 50 to 100 times more electricity than conventional machines. This further adds to the cost of manufacturing any product via 3D printing.

Moreover, a study the Illinois Institute of Technology shows that 3D printers can have substantial emissions of potentially harmful nanosized particles in indoor air. The study highlighted:

“The printers were used to print small plastic figures during normal operation. The resulting concentration measurements were then used to estimate UFP emission rates from these printers.

Estimates of emission rates of total UFPs were high, ranging from about 20 billion particles per minute for a 3D printer utilizing a lower temperature polylactic acid (PLA) feedstock to about 200 billion particles per minute for the same type of 3D printer utilizing a higher temperature acrylonitrile butadiene styrene (ABS) feedstock. The emission rates were similar to those measured in previous studies of several other devices and indoor activities, including cooking on a gas or electric stove, burning scented candles, operating laser printers, or even burning a cigarette.”

These two factors will further restrict the widespread adoption of 3D printers in industrial as well as consumer segment. So, while the 3D printing stocks may appear cheap, the prospects of the technology are still dim. Analysts were estimating that the 3D printing industry will be worth tens of billions of dollars in the coming years. However, given the factors that make the technology practically useless, I don’t think the industry will be worth billions. Moreover, the 3d printing sector is very fragmented, and I believe the industry is not big enough to accommodate all these companies. I’m pretty sure many of the big name 3D printing companies will go bankrupt in the coming years, which is why I’m still confidently recommending investors to short the stock.

Conclusion

In the present market, I think investors should wisely stay away from speculative companies. The incompetence of 3D printing technology has brought down almost all the stocks in the industry and given the shortcomings mentioned above I still think there’s more downside to come. Hence, I think investors should short the stocks mentioned above.

Published on Oct 1, 2015
By Ayush Singh

Copyrighted 2016. Content published with author's permission.

Posted in ...