3D Systems has pulled a bit of a stock surprise this week. By “stock surprise”, I don’t mean “generic surprise from a collection of well-worn surprises”, but a surprise relating to their stock, listed as DDD on the NYSE. The company recently announced the offering of 5,950,000 shares of common stock in an underwritten public offering. The underwriter, Canaccord Genuity, was also granted an option for 30 days to purchase an extra 892,500 shares of common stock.
Why so serious, DDD? 3D Systems has stated that they “[intend] to use the net proceeds from the offering to finance future acquisitions and for working capital and general corporate purposes.” Working capital and general corporate purposes sound pretty boring, but future acquisitions? That’s pretty juicy. What new companies could fall under the 3DS fold?
Thinking small, we might see the industry leader pursue their lead competitor, Stratasys, and purchase further service bureaus or industry-specific firms. As Stratasys expanded its RedEye 3D printing and prototyping service with the acquisition of Solid Concepts, one of the largest rapid prototyping firms, and Harvest Technologies, 3DS could follow-suit and look for ways to strengthen their QuickParts division.
3D Systems might also feed its healthcare unit, which it bolstered with the purchase of Medical Modeling, Inc., a company that Rachel described as “an early pioneer in the field of 3D printing-centric personalized surgery and patient-specific medical device solutions with FDA-cleared manufacturing processes and world-class expertise.” Or, given Stratasys’ continued development of its dental 3D printing division, 3D Systems’ newly consolidated Personalized Surgery and Medical Devices unit could be complemented with an expansion of their own dental 3D printing services.
Thinking bigger – and only because I think getting shiny, new stuff is bigger than improving shiny, old stuff – we might see 3DS pack their already hefty technology portfolio to the brim with new 3D printing processes. 3D printed electronics? Graphene? Bioprinting? It’d be interesting to see the company get into even more materials, but, after bringing ceramics, metal, and sugar to the table in 2013, that may be asking too much.
Whatever businesses they eventually decide to acquire, the stock market hasn’t reacted too amicably to the news, with the share price of DDD tumbling more than $6 at the time of this writing, just as their stock price was starting to recover after a few downgrades from major analysis firms that I wouldn’t trust with my bearded dragon. Then again, I am not a stock analyst (why do I have to keep telling people that?). According to The Motley Fool, however, long-term investors may not need to worry about this latest stock dilution:
Of course, the concern with secondary offerings is that it dilutes existing shareholders. As of May 23, 3D Systems had approximately 103.9 million common shares outstanding, and after the completion of this offering, existing shareholders will be diluted between 5.7% and 6.6%…
Historically, 3D Systems has demonstrated to investors it knows how to make acquisitions that help drive its organic revenue growth rate higher, and previous share offerings haven’t had a long-term impact to its stock price. In May 2013, 3D Systems offered 7.5 million shares at a price of $40 per share, and shares have risen more than 30% since then.
…[I]t’s likely in the best interest of long-term investors. Upon completion of this offering, 3D Systems will have essentially doubled its cash position, giving the company plenty of capital to continue building out the most vertically integrated 3-D printing company in the entire industry…
I can never trust anyone outside of 3DP, though, so I’ll wait to hear from 3D Printing Stocks’ Gary Anderson to weigh in, before I decide whether or not to feel optimistic. And I’ll wait until 3DS buys some rad new stuff before getting too excited about the next 3DP convention. (BTW: I’m long on DDD and SSYS.)
Source: 3D Systems