2013 saw 3D stocks explode with the promise of a new technology that could possibly disrupt all sorts of industries. Being able to “print” physical products right from your home was seen as something that was sure to be a big part of the future. Three companies (DDD, SSYS, and XONE) all rose unfettered as investors dreamed that this technology was going to have high growth for years to come.
But while these stocks soared to new highs almost daily, the short sellers were out in force with their skepticism that 3D printing was being hyped way too much. Doubters felt that while the this new technology was here to stay, it wasn’t the money maker that investors were hoping for. Remember, high growth is great but it has to lead to profits somewhere down the line.
2014: Reality Takes Center Stage
2014 has been a much different year as these three stocks have absolutely collapsed. DDD is down almost 50% from its highs and XONE is down about 60%. SSYS has done a bit better, only down 30%. What happened? Did something trigger the sell offs?
As a high growth stock investor, you need to be ever vigilant of changing attitudes and perceptions. I think that is what happened with the 3D priming industry as the stocks simply went to high to fast and even the most bullish proponents of the stocks couldn’t legitimize the high valuations. Seeing potential growth and being excited by it is one thing but you can’t just keep paying more and more for it when the financial numbers don’t add up. Its not just happening with 3D stocks either as many of the Internet high flyers are down significantly this year.
Looking for high growth stocks is a full time job when you take into account that not only do you need to find the best ones but you constantly have to monitor their progress. Fall asleep at the wheel or take a two week vacation and you might come back to find that most or all of your profits are gone. The better stock investors treat this as “job” because they are serious about it and put the hours in that are needed to succeed.
3D May Be The Future But You Have To Pick The Right Companies
Clearly, 3D printing is in its infant stages and will play an important part of many industries in the future. But will we really all have a 3D printer in our homes? What could we possibly use it to make that it will be so widely adopted? I think that is the question many investors are now asking themselves and why the stocks have come down. Even if it is a cool technology (and it is), if it isn’t going to be widely adopted and used how much can these companies make? Growth alone doesn’t lead to profit.
Smart phones were new and truly changed our lives. People of all income groups have their smartphones and teenagers can’t seem to live without them. It is an industry where you can easily see tons of money being made for many years to come. But 3D printing isn’t going to be as universally “needed” as a smart phone and might only be used for industrial uses. It will change the way many businesses operate but the high growth many investors once envisioned just isn’t there.