3D printing is an industry in turmoil. The news is full of amazing stories about the uses for 3D printers — from 3D printed tortoise shells to a $50 3D printed prosthetic hand — and 3D printers are on the shelves of some of the country’s largest retailers, including Staples, Inc. (NASDAQ:SPLS) and Best Buy (NYSE:BBY).
At the same time, 3D printing stocks have plummeted since last year.
In perhaps the biggest public blow to the industry, Makerbot — the pioneering 3D printer company that was purchased by Stratsys (NASDAQ:SSYS) in 2013 in a $400 million deal — recently announced layoffs and the closure of its three retail stores.
While the future looked bright in 2013, the shine is off 3D printing companies today.
Barriers to Mass 3D Printing Adoption Remain
For all the potential 3D printers hold, mass consumer adoption remains elusive. I asked in 2012 if 3D printing was approaching its inkjet moment, that point where the printers go from hobbyist and commercial use to being commonplace in homes.
There were barriers in 2012, and despite the enthusiasm of investors who drove 3D printing stocks to new heights in 2013, many of those barriers remain. Among them:
- Cost (many consumer 3D printers are priced at $1,000 and up)
- Expensive supplies
- Lack of printable models
- Complexity in 3D printing process
- Long print times, usually measured in hours
There have been improvements by 3D printing companies since 2012. Printers aimed at the consumer market had come down slightly in price, manufacturers have gone to considerable lengths to make the process simpler, and websites like Pinshape and Makerbot’s Thingverse are trying to address the shortage of 3D printing files.
However, for most consumers, 3D printing remains an expensive hobby at best, not a must-have technology.
3D Printing Companies Have Struggled
3D Systems (NYSE:DDD) — manufacturer of the Cube 3D printer I recently reviewed — saw its stock rise rapidly as 3D printing was pumped up to be the next big thing, only to begin falling in mid-2013 as reality took hold. It climbed from the $10 range to start 2012 to $96 at its height, only to drop back under $25 today.
Makerbot’s parent company, SSYS, peaked at $136 six months after buying Makerbot. Recognition that 3D printers were still far from selling like hotcakes set in starting in 2014. Since then, SSYS has slid down near $35 — a 72% decline.
ExOne’s (NASDAQ:XONE) IPO offering of $18 in early 2013 quickly saw the industrial 3D printing company’s value shoot up as part of the 3D printing wave, topping $68 by the summer of that year. Since then, it’s been downhill to the current sub-$14 level in a 79% drop.
Germany’s Voxeljet AG (NYSE:VJET) spiked to $60 at the end of 2013, but has fallen 87% and now trades at $8.
Those numbers show a distinct pattern. As excitement built around 3D printing thanks to media hype, glitzy Consumer Electronics Show appearances and agreements to stock consumer-friendly 3D printers on national retailer shelves, stocks spiked. But as the reality of 3D printing hit home, the stocks of top manufacturers have deflated.
Does 3D Printing Have an Upside?
The market hasn’t necessarily hit bottom — even with drops in market cap in the 70% to 80% range for many of the largest players, many 3D printing companies haven’t yet hit historical lows.
However, for most of these companies, historical lows represent a time when the industry was flying completely under the radar. Printer sales were largely to industrial customers and volume was modest, even by today’s standards (fewer than 110,000 3D printers were sold in 2014, compared to more than one billion smartphones).
The big stock spikes of 2013 reflected an assumption that the consumer 3D printer market was going to explode, with a resulting massive ramp up of 3D printer and print cartridge sales. When it became clear that mass adoption was still years in the future, the bottom dropped out of the market.
That’s good news for those who are now looking at 3D printing companies as a potential investment (less so if you got in during the 2013 peak).
The ride is likely to remain rocky. There could be further consolidation and more layoffs like those at Makerbot, and we probably haven’t seen the bottom for 3D printing stocks.
However, the future still looks good for 3D printing.
Outlook for 3D Printing Companies
The uses for the technology continue to grow, and, slowly but surely, obstacles to mass adoption (like finding models to print) are being removed. The technology gets more consumer-friendly with each generation of new 3D printers.
Once the stars align — 3D printers are more affordable, 3D printing is a faster process than today and compelling models for 3D printing are readily available on demand — that elusive consumer mass market is likely to take off.
The question is: How bad do things get in the meantime, and will there be casualties among 3D printing companies before the worst is over?
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.