Why Stratasys, 3D Systems, and Office Metal Inventories All Crashed Today

What happened

Industrial 3D printing stocks Stratasys (NASDAQ: SSYS), Office metal (NYSE: DM), and 3d systems (NYSE: DDD) crashed in unison today. By the time the closing bell rang, Stratasys stock was at its lowest with a loss of 15%, followed by Desktop Metal, down 9.9%, and 3D Systems, at 8.1%.

And oddly enough, it’s the title with the biggest loss that has the only news today.

So what

And that’s probably good news too. This morning, Stratasys announced that it had acquired UK large-format industrial stereolithography company RP Support Ltd. (RPS) to develop Stratasys’ “polymer solution suite”. Beginning to market RPS ‘Neo 3D printer line globally, Stratasys predicts the acquisition will be “slightly revenue accretive” by the end of this year, and add to adjusted earnings per share.

Good news? Maybe, but it’s hard to call this good news. Even in the press release announcing the acquisition, Stratasys admits that the overall “global addressable” market for industrial stereolithography systems is only about $ 150 million and growing only about 10% per year. RPS would indeed need to capture a very large chunk of that market if it was to shake things up on Stratasys’ annual revenue of $ 538 million. Additionally, if RPS’s business grows only 10% on average – or even a little better than that average – it’s more likely to slow the growth rate of total profits (analysts’ projected) by 30 %, rather than speeding it up. up.

On the plus side, Stratasys did not say how much they paid for RPS, implying the number was not important. Net-net, this news seems rather “meh” to me.

Now what

Of course, similarly, simple “meh” news doesn’t really explain why Stratasys stock is declining so much today – or why 3D Systems and Desktop Metal are following it.

My guess? Investors are starting to worry about earnings.

3D Systems is due out with fourth quarter results on February 24, with Stratasys reporting a week later on March 1. Analysts have pegged Stratasys for just a quarter of balance – far worse than the $ 0.18 per share it earned a year ago. And 3D Systems, although it told us last month that it could turn a profit, could also do not.

As for Desktop Metal’s recent IPO, it has yet to announce a profit date. Still, it makes sense to assume that any bad news reported by the two big names in 3D printing could have a ripple effect on Desktop Metal stock as well, especially since analysts aren’t overly optimistic about it. to action to begin with – predict a loss of $ 0.07 for the current quarter.

Given that the only good news we saw in the industry wasn’t so good today, it’s understandable that investors instead decided to focus on the prospects for potential bad news ahead.