Despite forecasts of the huge amounts the 3D printing industry is going to be worth in like five years, stocks and current markets don’t seem to reflect that forecast. Stocks of popular 3D printing fell a good margin in February.
Companies like 3D Systems, Stratasys, and 3D printing and conventional manufacturing service provider Proto Labs saw a decline in stocks in February. The stocks went down 15.9%, 11%, and 15.3%, respectively, according to data from S&P Global Market Intelligence.
The drop in stock prices is more of a global phenomenon sparked by concerns that the spread of the novel coronavirus, COVID-19, could curb global economic growth. For context, the S&P 500 index dropped 8.2% last month.
In 2020, shares of 3D Systems, Stratasys, and Proto Labs are down 2.9%, 25.9%, and 17.2%, respectively, while the broader market has returned negative 7.7%.
However, the drop in share prices cannot only be attributed to the coronavirus scars, anemic fourth-quarter 2019 results, disappointing guidance, or both these factors.
Proto Labs was the first to report disappointing 4th quarter results whose impacts were seen immediately and the next day as stock prices fell 9.2% and another 4% the next day. In contrast, S&P 500 rose by 1% over this period.
On Feb 6th, Proto Labs’ reported shortcomings in revenue growth though according to expectations, announcing a 0.8% slip year over year to $111.9 million, earnings per share (EPS) dropped 21% to $0.56, and adjusted EPS fell 15% to $0.63.
Stratasys and 3D Systems reported their quarterly results on the same day, with Stratasys reporting before the market opened on Feb. 26 and its rival following after the closing bell.
According to reports files the same day, Stratasys stock fell 4.5% and then another 13.1% the next day, before bouncing back 5.6% on the day after that
In Q4, Stratasys’ revenue fell 9.5% year over year to $160.2 million. It posted a loss per share of $0.05, compared with earnings per share (EPS) of $0.12 in the year-ago period. Adjusted for one-time items, EPS declined 14% to $0.18.
On the two days following its earnings release, 3D Systems stock dropped 10.6%, compared with the S&P 500’s decline of 5.2% over this period.
This also follows, Moreover, when the company had announced earlier in February that CEO Vyomesh Voshi had informed the board of his intention to retire, leaving investors uncertain about the future of the company.
In the fourth quarter, 3D Systems’ revenue fell 8.9% year over year to $164.6 million. It posted a loss per share of $0.04, flat with the year-ago period. Adjusted EPS landed at $0.05, down 50% from the fourth quarter of 2018. Wall Street was looking for adjusted EPS of $0.01 on revenue of $163.7 million.
The 3D printing companies are taking steps to improve earnings for 2020, providing revenue guidance for the year. With the strategies put in place, all 3 companies expect earnings to rise. An increase of 1.6% year over year for Proto Labs, an increase of 6.9% year over year for Stratasys. 3D Systems didn’t release official guidance.
The coronavirus epidemic is only going to make things worse on this front. The viral breakout has seen so many markets fail and deliveries of products dropping and expected to keep dropping. Some have opinions that the fallout from COVID-19 is going to push the United States and the world into a recession. You might want to lean towards recession-resistant stocks.