If something is too good to last, it won’t. That could be the story among the publicly traded companies we are watching in the 3D printing business. Growth began to pick up smartly in the first half of last year, pushing shares of 3D Systems Inc. (NYSE: DDD) up around 250% by January of this year. Shares of Stratasys Ltd. (NASDAQ: SSYS) were up 650%, mostly due to a merger with a competitor that completed in early December. ExOne Co. (NASDAQ: XONE) came public just over a month ago and shot up nearly 60% on its first day of trading. Service provider Proto Labs Inc. (NYSE: PRLB) is up 67% since its IPO in February 2012.
But times got a little choppy in January, and while every company got a boost from the ExOne IPO, the glow from that faded relatively quickly. In the past 30 days, only ExOne can show a positive move and that by less than 4%. Is growth really behind these companies? Let’s take a look at short interest.
Short interest in 3D Systems rose 60.1% in the two weeks to February 28 to 24.05 million shares. Some 29.2% of the company’s stock is short.
Short interest in Proto Labs fell 48.7% to 1.03 million shares, or 6.1% of the company’s float.
Stratasys saw short interest rise by 1.6% in the final two weeks of February to 2.91 million shares, or about 10.7% of the company’s float.
Short interest in ExOne rose from about 266,000 from February 15 to 1.24 million shares by the end of the month. Of 6.31 million shares floated, about 19.6% are short.
With the exception of service provider Proto Labs, we are seeing some good-sized bets against significant growth among the 3D printer makers. That could be due to a couple of reasons. First, these machines have yet to find a place in production-quantity manufacturing. They are still being used for prototyping. That will change, but perhaps not rapidly.
Second, the industrial market is far smaller than the consumer market, and none of these companies has a product directed toward consumers. Privately held MakerBot Industries has introduced a 3D printer aimed squarely at the consumer market, with a price tag of $2,199. And yesterday, at the SXSW trade show, the company introduced a 3D scanner that can replicate a solid object without the need for serious 3D drafting software and skills. The company scanned a garden gnome and then spun one out on its 3D printer.
For comparison, when Apple Inc. (NASDAQ: AAPL) introduced its first LaserWriter desktop printer in 1985, the machine sold for $6,995, which would equate to about $14,700 in 2012 dollars. Some of the industrial 3D printers do not sell for much more than that today.
As with all new technologies, the makers of 3D printing devices need to educate their customers before sales really take off. This is especially true for sales to industrial customers, who need to figure out how to adapt the new technology to their own processes. That is a long and costly road, and there are more than a few wrecks along the way. The short interest in these 3D printing firms are betting on those wrecks.