As red hot as 3D printing has become within the past year — now that 3D printer prices have fallen to the affordable $1,000 area — the industry has only scratched the surface of its potential. Yet, too many of these stocks have gotten well ahead of themselves based on the hype, and reached dangerous levels as a result.
Stratasys (NASDAQ:SSYS) is one of those overheated names. Shares are up more than 150% since the end of 2011, and that’s factoring in the 34% plunge the stock suffered in the first quarter of this year.
But isn’t SSYS one of the media’s and the market’s newest darlings, drawing nothing but bullish attention? Yes, and while the company deserves the attention, the stock doesn’t deserve its current valuation of 31 times its forward-looking earnings — it has been driven up by more hype than reality. (When the consensus seems unanimously bullish, it usually means everyone who is willing to buy already holds a position.)
The market’s starting to realize that it will be a long time before Stratasys can justify its current price — shares are putting a great deal of bearish pressure on the 200-day moving average line as a support level. If the 200-day line at $70.12 breaks down as a floor, it could trigger a selling avalanche. The risk of meltdown is just too great for the time being.