3D Systems: Will the 3D Printing Giant Continue to Thrive?

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What is next for the $5 billion 3D printing company?

In a critical analysis published in the Wall Street Journal, Rolfe Winkler wrote, ”[3D Systems'] valuation and the insider selling are potentially worrisome signs that 3D hype may be outpacing reality.”

Winkler has a number of concerns, from adoption of consumer 3D printing to distribution risks to weak materials sales.

Let’s take a deeper look at how far this 3D printing giant has come.

Since May 2011, when the company transferred from the NASDAQ to the NYSE, its stock price has grown nearly 300%. Their stock is riding near its all-time high, shown in the chart below.

Expanding Revenue and Building a Consumer Business

The company expects to generate around $500 million of revenue this year, with the majority of sales in the industrial sector. But it has also expanded aggressively into the consumer business with the Cube and CubeX 3D printers, and expects prices of desktop 3D printers to come down from $1300 to below $500 over time.

3D Systems recently presented a full business update at the Citi 2013 Global Technology Conference; you can read the full transcript at Seeking Alpha.

The company has acquired 37 companies since 2009 and continues to look at M&A as a way to fill in the gaps of their business. Here are some key acquisitions:

• Bespoke Innovations in May 2012 for 3D printed personalized prosthetics
• FreshFiber in May 2012 for 3D printed electronics accessories
• My Robot Nation in April 2012 for creative solutions to support 3D printing community Cubify for kids and adults
• Paramount Industries in April 2012  to advance aerospace and medical device 3D printing

But the company missed their chance to acquire MakerBot, the leader in desktop 3D printing. MakerBot was acquired by Stratasys, 3D Systems’ competitor, for $403 million earlier this year.

Challenges and Opportunities Ahead

3D Systems has had its share of success. In fact, it was recently ranked #5 of the Fortune Magazine’s top 100 fastest growing companies. But will that success continue and what are it’s challenges?

Can the Cube 3D printer series beat out the Stratasys-MakerBot partnership? Can 3D Systems maintain its industrial 3D printer sales growth and continue to optimize its supply-chain and reseller network? Will its entry into the consumer market distract from its larger industrial business?

Perhaps only time will tell. With $350 million on the balance sheet and a $5 billion market cap, 3D Systems seems poised to be competitive as the 3D printing industry continues to accelerate.

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