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A 5-Point Checklist for Investing in 3D Printing Stocks – Motley Fool

by • August 19, 2016 • No Comments

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Image source: Hewlett-Packard.
According to Wohlers Report 2016, a major 3D printing insights report, the 3D printing industry produced additional than $5.1 billion in of the world ractuallyue last year, a 25.9% year-over-year increase. By the end of 2020, Wohlers estimates that 3D printing can generate over $21 billion in ractuallyue, an over fourfold increase of 2015 levels.
Before investing in 3D printing and attempting capitalize on the expected growth it has to contribute, it is significant to have a important belief of the landscape. The following checklist can assist you get started.
1. Understand the business version
First and foremost, have a solid belief of how a 3D printing company manufactures money, that can differ greatly of one company to another.
For instance, 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS) primarily operate a razor-and-blades version, where 3D printing device sales fuel the usage — and subsequent sale — of higher-margin materials over a printing device’s lifetime. Proto Labs (NYSE:PRLB), on the other hand, is a 3D printing and quick-turn making service provider that lets customers get 3D printed and manufactured parts created on their behalf.
Whilst both business versions can capitalize on 3D printing’s growth, they operate with completely various cost structures that drive profitability.

2. Estimate the market opportunity
Estimating a 3D printing company’s market opportunity can be a complex task. One way to approach it is of the point of view of a business’ ability to target use cases. Generally speaking, the additional uses that a 3D printing company can cater to, the greater its market opportunity.
In this context, 3D Systems’ market opportunity is most likely sizeabler than Stratasys’. After all, 3D Systems has sactually distinct 3D printing technologies in its portfolio to contribute customers, which include the ability to 3D print in metal, whereas Stratasys just contributes three technologies — all of them plastic-based.
For a service provider like Proto Labs, its opportunity is directly correlated to the types of innovation it adopts and the number of materials it contributes customers.
3. Think through variousiation
In order for a 3D printing company to assist a competitive advantage in the market, it has to be variousiated, that can take on most forms. It may be an new innovation, business version, system, specialization, or actually a high barrier to entry.
One notably variousiated example is Carbon’s not long ago added M1 printing device, that claims to be anywhere of 25 to 100 times faster than anything preceding it. Moreover, the M1 can just be acquired through an industry-first subscription version, that requires a three-year, $40,000-per-year minimum dedication. For this price, users get an internet-connected 3D printing device (another industry first) that gets advantageous over time through over-the-air updates, in much like style to how Tesla Motors releases software updates for its electric vehicles.
4. Size up the competition
The beautiful growth prospects of the 3D printing industry has invited new competition, that can undermine an incumbent 3D printing company’s competitive positioning. In addition to Carbon, Hewlett-Packard (NYSE:HPQ) plans to enter the 3D printing industry later this year with a homegrown innovation that leverages decades of inkjet experience. HP claims its Multi Jet Fusion printing device can be 10 times faster than major technologies on the market nowadays.
Arguably, since Carbon and HP are focused on the plastic segment, Stratasys faces greater competitive pressure of these entrants than 3D Systems, that has a additional diversified business version outside of plastic-based 3D printing devices.
In other words, the threat that competition poses on a 3D printing company should be evaluated on a case-by-case basis.
5. Understand the risks
Much like competitive threats, risks that affect one 3D printing company may not apply to another. At the same time, there are risks that affect the 3D printing industry in general. Overall, it is significant to know the risks that are specific to the company and the industry.
One such “global” risk is the ongoing slowdown in pro and industrial demand that began in early 2015, and has affected virtually each company that caters to the space. Most not long ago, in the 2nd quarter, 3D Systems’ printing device sales fell 30% year over year, while Stratasys’ printing device sales fell 19%.
One other global risk is how a sizeable portion of the 3D printing’s expected growth trajectory is based on the innovation’s continued expansion into making uses. On the other hand 3D printing contributes promise for use in making, it remains a sizeablely unproven innovation in this realm. If 3D printing’s adoption in making uses struggles to acquire traction, it may alter the growth outlook of the entire industry.
The following step
Between increased competition and improved capabilities, the 3D printing industry is widely expected to alter in the coming years. This alter is most likely to manufacture 3D printing stocks a volatile group for the foreseeable next. Ultimately, these facts increase the importance of continuously monitoring your 3D printing investments for material alters.


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