3D systems announced that it’s consumer 3D printer will now be offered at Staples stores. The printer sells for $1300 and enables users to print objects using plastic ink that are about 5 cubic inches in size. Since this announcement, the stock has been on a tear, up 25-30%.
At a Glance: Symbol: US-DDD Price: 49.30 Market Cap: $4.58B Yield: N/A
3D printing has been getting a lot of attention in the news over the past few years – it is considered additive manufacturer – meaning objects are created by applying layer by layer of material. This is different from the majority of manufacturer today where you start with a block of material and remove material through drilling/cutting. The obvious benefit is efficient use of materials and reduction of waste. Despite the idea/technology being around for quite some time, it has only become for financial viable as the cost of 3D printers have decreased.
My investment in DDD is an investment in the 3D printer space – and that it would revolutionize manufacturing – specifically in making design and prototyping much simpler. Instead of using a CAD drawing and making a clay model (time consuming) or fabricating a miniature model, 3D printers could take the CAD drawing and just print a model – saving lots of time, energy, and materials. Volkswagen did a cool marketing campaign for their Polo model – allowing users to design the outside of the car and have it printed in 3D (using DDD’s printers of course!).
What I eventually learnt is that 3D printing is being used in even broader purposes – for actual manufacturing and even in healthcare research. Actual manufacturing? If you look at 3D System’s Cube system – it prints a 5 cubic inch plastic object – great for trinkets and it’s definitely got a cool factor. However, the company’s large scale printers and being used by other companies to actually manufacture goods and components. More impressively, 3D system large-scale printers have been outfitted to manufacture parts that are on fighter jets:
If you extend that even further, I read a great article (unfortunately can’t find it now) that illustrated the potential future – father and son playing football the backyard. Football goes into the neighbour’s yard and the dog chews at the ball, pretty much killing it. Father and son go inside, download a football design; have the printer print it; while taking a breather wit some lemonade; then resume playing. If consumer 3D printers ever become that affordable, this could revolutionize our thought about how manufacturing happens – this isn’t a product manufactured overseas in some sweatshop – this is individuals manufacturing products on-demand. It’s very Star Trek-ish that we’re still quite awhile away from. Even with 3D System’s Cube, the best product I can think of is customized phone covers (which you would have to sell maybe 200 of them at $10 to cover the cost :P)
Perhaps the most interesting application I saw was the printing of a human kidney and actually transplanting it in a patient. With the age expectancy of the world’s population increasing, there is actually a shortage of organ transplants – which has started this whole path on creating synthetic organs. Even printing skin to treat burns has been researched. These are areas I never expected 3D printing to go into.
To invest in this industry, there are only two public investments that can be made 3D Systems (DDD) or Stratasys (SSYS). A third printing company ExOne (XONE) just IPOed earlier this year but is much smaller compared to the first two. Both provide printing services and sell printers to corporations but I picked DDD over SSYS because it had at least some focus on the consumer market. The Cube which received rave reviews at the Consumer Electronics Show in 2012 and it’s focus on creating a community or marketplace where designers could sell designs and printer owners could manufacture. SSYS has a partnership in place with HP – but it seemed as though they haven’t figured out how to approach the consumer market yet.
As news has picked up around 3D printing, so has the market’s reaction to the stock:
However, as the stock has risen, I’ve been selling portions of my holdings (unfortunately missing out on some great gains). I’ve been doing that because while the future of 3D printing is definitely exciting, there hasn’t been a clear winner as to a) what company will benefit most (there are actually many companies in the 3D printing space – DDD, SSYS, and XONE are just the only ones publicly traded; and b) in what area 3D printer will have its biggest effect – whether it be in design, actual manufacturing, health care, or even as a consumer product. Without that clear direction (even from DDD), I find it difficult to hold onto a company that is worth $4.5B on just $400M in sales.
For now, I’ll keep my now significantly reduced holding of DDD as an investment in the technology but will be keeping a close eye for where this technology goes – and maybe even buy the Cube to be the cool guy on the block!