The one billion (trillion?) dollar question nowadays is: is there a bubble in 3D printing stocks values? Perhaps an equally valid question is: what has made 3D printing pure players swing up and down so much over the past few months. One thing is for sure: financial analysts and investors have rarely, in recent times, been so careful about not riding a financial bubble and, paradoxically, they have become careful with an industry that is proving to be solid and even beneficial to the world as a whole.
Perhaps some investors are still recovering form the Internet bubble, the derivatives bubble, and the sub-prime bubble but guess what? Those business were highly uncertain to begin with. Internet companies with no business models, high risk debts turned into assets… come on.
With 3D printing, it is my opinion, that much of the uncertainty comes from a lack of understanding of what 3D printing can actually do. Even 3D printing adopters are not yet entirely certain of what is possible with it, even while recognising its enormous potential and maybe spurred on by the fact that their competitors are using it. This lack of understanding, however, is particularly evident among journalists, financial journalists, financial operators and investors that are not directly involved with the industry. Even in America, where technology – and the financial aspects of technological companies – receives great amounts of coverage in financial news, it appears that generalist and economic media do not know exactly what industrial 3D printing is about.
So, every time a 3D printing company makes an announcement that differs from profit forecasts, stocks tumble. But that can happen in healthy businesses: you just cannot always beat profit expectations, especially at a time when the global economy as a whole is so uncertain.
3D Systems makes profits but missies its financial guidance? Stocks crash by some 15%. Not just 3D Systems but all pure player 3D printing stocks. In reality, the entire global stock market tanked pretty hard lately and 3D printing companies are actually holding up quite well, considering most 3D printing companies do have a market value that is roughly 10 times their yearly revenues. This, however is all about growth perspective. Do you think the 3D printing industry will grow? Most industry commentators, and even most analysts, do. By 25-30% annually, in fact. For sure the work here at 3Dprintingindustry.com has been growing by at least that much.
The media’s lack of understanding was particularly apparent in this Bloomberg’s video interview to Voxeljet’s CFO Rudolf Franz, properly titled “Is there a bubble in the 3D printing Industry” (anyone ever hear of the book “Don’t think of an Elephant, by George Lakoff?). Cory Johnson from Bloomberg questions Mr. Franz about the issue of two machines by Voxeljet being financed out to its customers. When this news first emerged in December, around the same time as Euromold, it did take a nice chunk out of Voxeljet’s stock value. Whether this practice is a winning strategy or not, is not something I cannot comment on. What surprised me, however, is Johnson’s reaction to Voxeljet saying they have sold “only” 55 machines to date.
Apparently at Bloomberg they were expecting 55 machines per trimester. This is not something against Mr Johnson or Bloomberg: the interview is really interesting and it is not possible for them to be fully aware of all dynamics in all the industries they cover. In general, though, what most people do not understand is that selling a Voxeljet 3D printer is basically like selling a factory. Does any company sell 55 factories per trimester? Unlikley. 3D printing companies maybe will, one day, but that day is still some way off. The growth curve for the 3D printing industry will not be a very steep one so much as it will be a very long one. My advice, if you have stocks, is relax, you are in it for the long haul, and all this talking about a bubble is good: it means that investors are careful and will avoid ruining a healthy industry by artificially creating a real, huge, financial bubble around it. Maybe 3D printing is making even Wall Street a little more considerate, that really would be a miracle.
Disclosure: The author of this article owns all pure player 3D printing stocks