Forecasts of slumping stock prices due to the COVID-19 outbreak proved to be true for many companies. The situation worsened when warnings of a “very, very painful” two weeks of mounting COVID-19 infections saw the stock market crashed into new lows.
While stocks of companies and services are in a downward spiral, it stands otherwise for 3D printing stock prices which are rather on the rise.
The United States Government has recently been showing progress in the government’s efforts to slow the spread of the coronavirus as President Trump says he sees a “light at the end of the tunnel,”. This has made investors assumed the end is in sight, pushing them to bid on shares of companies they expect to profit when things get back to normal. 3D printing stocks are particularly enticing in this scenario.
The stock markets in the afternoon of Monday Monday was characterized by surges in share prices of 3D printer maker 3D Systems (NYSE:DDD) which jumped 15.5% as of 3:25 p.m. EDT, while its archrival Stratasys (NASDAQ:SSYS) was up 13.6%. Proto Labs (NYSE:PRLB), another 3D printer manufacturer and printer of prototype products for corporate customers, was somewhere in the middle, up 14.5%.
Though most of these jumps may be related to the president’s words. In addition to the president’s words, use cases of 3D printers making efforts in printing transparent face masks essential for health workers in the frontlines of the fight against COVID-19 have been all over the news lately.
A note J.P. Morgan, the American multinational investment bank and financial services holding company headquartered in New York City suggests that new entrants are “surging” into the market for making 3D printers as first reported by TheFly.com. The newcomers appear to be capturing market share from 3D and Stratasys. This new competition, combined with the unpromising prospects of attempting to do business in the middle of a recession, has J.P. Morgan worried that 3D Systems and Stratasys are unlikely to return to growth mode anytime soon.
Neither stock is currently profitable, so even with their prices down 45% and 44%, respectively, over the past 12 months, J.P. Morgan says it finds their valuations “not compelling,” and rates both stocks underweight. As for Proto Labs, while J.P. Morgan didn’t comment on that one specifically, the fact that Proto Labs is profitable only makes it easier to see that, at 30 times trailing earnings, the stock isn’t exactly cheap.
Given all the above, investors may be best advised to use today’s rising prices as an opportunity to exit these stocks. When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.
All this recovery in stock prices still doesn’t make the stocks profitable. 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 was 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.