3D Printing Gen2: “The World’s Most Disruptive Growth Market is Taking Off – Again!”

What's Wyatt Research's "3D Gen2: The Only 3D Printing Stock to Buy?"

Tyler Laundon at Top Stock Insights has a new pitch out for the return of 3D printing as an investing phenomenon — if you’ve been watching the pundits or the newsletters for any length of time, you probably remember the huge push that the 3D printing stocks got in the press starting a few years ago, when small, personal, relatively inexpensive printers started to be commercially available and the companies that made them, primarily Stratasys (SSYS) and 3D Systems (DDD) suddenly took over the public imagination.

We all started thinking about whether there would soon be a 3D printer in every home, and whether, as the Motley Fool teased at the time, these “instant manufacturing” machines would make China obsolete.

And, it turns out, the hype got quite a bit ahead of the market — no big surprise there. I suggested the 3D stocks as we were early in the hype wave, because the investor enthusiasm was destined to drive them up, but I suggested selling them within a year as they got close to 100% gains and were really completely unjustifiable on any kind of valuation metric you could imagine. They doubled again after that, and a whole new crop of 3D printing stocks to ride that “bubble” mentality grew up quickly, but all the stocks have now come back down dramatically… so is it time to buy some kind of 3D printing stock? That’s what Laundon is suggesting, it appears — here’s a bit from the ad:

“The world’s most disruptive growth market is rapidly taking off.

“Launched in 2009, it tripled in size by 2013 – handing investors profit windfalls of 1,153% and 4,546% along the way.

“Its rise was one the most spectacular technological achievements of our time.

“Long dreamed of, many believed such an advance would be forever stuck within the realm of science fiction.

“No longer.

“So what is this hugely spectacular and highly disruptive growth market?

“3D printing.”

Well, part of the problem with DDD and SSYS was that they weren’t really launched in 2009 — they had been around for a decade or more, steadily improving their huge, expensive machines that were largely used for prototyping, and the advancements in materials, speed, and precision have largely been iterative… the products didn’t suddenly become 10X better in 2009 and 2010 as the stocks were soaring, they just captured investor imagination and, to a lesser extent, the imagination of hobbyists who wanted to tinker with making their own action figures and doodads at home.

The revolution could well still be coming, but it’s coming slowly — so is there some new leap forward now that will make us rich, now that many investors have given up on the sector? More from the ad:

“For one thing, the humongous growth in the market for 3D printing technology will be unlike anything seen so far.

You see, from 2009 to 2013, the 3D printing market grew from $1 billion to $3.5 billion.

“That’s 250% growth in just four short years!

“Impressive, yes?

“But here’s the thing: The growth we’re going to see over the next 10 years will absolutely dwarf this.

“That’s because global consulting firm McKinsey & Co. believes that by 2025 the global market for 3D printers will reach up to $490 billion.

“That’s means the market could grow by 14,000% in just the next ten years!”

And, of course, the technology is going to have to get a lot better, faster and cheaper for that to happen (as is true with pretty much all breakthrough products that ramp up quickly).

Which is really the crux of Laundon’s tease: That the next generation of 3D printing, which he calls 3D Gen2, will dominate the market and help spur that next wave of growth.

So what’s this “Gen2” product? Here’s a bit about that….

“With 30,000 nozzles spraying 350 million drops of thermoplastic or other powdered materials each second, 3D Gen2 will be both 10 times faster and 50% cheaper than existing 3D printers.

“In other words, what takes current 3D printers 38 hours to produce will take next gen printers only 3 hours!

“What’s more, it’ll do all this without sacrificing strength or quality in the process.

“As a matter of fact, both strength and quality will be enhanced immeasurably as a result of this technology.”

And who’s making it? What’s this secret company that’s going to make us all rich? Your clues…

“… here’s the best part: 3D Gen2 isn’t coming from a risky startup or volatile tech stock.

“Instead, a seasoned tech dynamo is developing this amazing innovation. And this company knows a thing or two about manufacturing world-class products.

“What’s more, it has several billion dollars of cash in the bank…and is making sound investments in this technology innovation.

“In fact, last year the company spent more than $3 billion on research and development.

“That’s a huge investment…and should provide this company with a solid advantage over the competition.

“When news of the 3D Gen 2 was made public last November, the markets reacted.

“Specifically, investors sold shares of highflying 3D printing stocks…companies that could be put out of business by this innovative new technology.

“Shares of these stocks were crushed…falling by 27 – 51% in a few short months.”

Ah… interesting, your Mighty Thinkolator sez this is Hewlett Packard (HPQ). We were hearing about this company’s rumored entry into the 3D printing business several years ago (and its scrapped partnership with Stratasys to produce a HP-branded 3D printer about five years ago), but it has, indeed, introduced a new take on 3D printing recently that CEO Meg Whitman thinks they will be selling by 2016 sometime — and it certainly does sound more impressive than the current crop of 3D printers (though I don’t know what R&D from SSYS and DDD and others might have planned for the next couple years).

HPQ is still planning to split the company in two, which will likely have much more impact on the stock price than 3D printing over the next year or so, but you never know — after the split, the computers and printers division (which is a drag on the business) will actually have a growth product to push, at least in theory (the enterprise/services business is where the growth is now — and that’s not all that much growth either, frankly).

So what’s the possible impact? Total sales for DDD and SSYS in 2014 were about $1.4 billion. If HP took that whole market from them in 2017, and it grows by 25% between now and then to $1.75 billion… or round it up to $2 billion… that would be about 2% of the expected HPQ sales of ~$105 billion that year (it may be two companies by then, but that’s the analyst-predicted total for both).

If HP actually manages to split the company, as planned into the enterprise/server business and the computer/printer business, 3D printing would be in the printing business, presumably, and it would be a part of what I expect will be desperate attempts to stop revenue from declining each year. HP does not have much brand power these days, though they do have strong corporate relationships (so they do get a bump when big new Windows versions are released that require hardware updates for corporate computer systems). No one, it seems to me, is rushing out to buy an HP computer unless it’s obviously better or cheaper than a Chromebook or a Lenovo or a Macbook… though that’s from my limited experience as a consumer, not an expert on trends on consumer electronics.

HP is, frankly, a pretty lousy business at this point that’s trying hard not to shrink, and quite possibly 3D printing will help with that, but it’s really hard for me to see this bringing 14,000% gains unless you really believe HP’s version of 3D printing is the last word, and will be as dominant and cash-gushing as their inkjet printing was in their glory days.

And yes, I would assume that whatever new product they come up with is going to be sold at a loss at first in order to generate future sales of printing powders and before they really get their production volumes up to improve margins, so presumably the real impact on the bottom line would take a while to hit. There is certainly potential if those printing powders are lucrative enough and if the next stage of 3D printing gets beyond prototype designers and hobbyists, but I think that’s more of a leap than this ad implies, and it will take a lot of investment to build up this new business.

3D Systems and Stratasys have gradually grown the business as almost a duopoly, and pricing remains pretty high for the machines and most of their revenue comes from their higher-end (not consumer) machines, so they do still sell with something like a 50% gross margin (meaning the machines and materials cost them about 50 cents to build for each dollar of sales, before taking account selling, general and adminstrative costs/overhead), so there is some gross profit to be had in this market — and HP can probably ramp up volume and invest in growing a market with much more muscle than SSYS or DDD ever could just because of its vast size and access to capital — but that has a flipside, too, the huge size of the company means it would take a lot to really move the needle on earnings or give investors real confidence in their growth potential.

Hewletter Packard under CEO Meg Whitman seems to at least be starting to get a little bit of the benefit of the doubt from investors again, but it’s still really a beaten-down value stock that’s been slashing costs. Their 3D printing technology does sound impressive, and it has even gotten some laudatory attention on CNBC from Jim Cramer and his pals (so it’s certainly not a “secret”), so I hope they’re able to turn that into a new growth engine for their computers and printers division as that gets spun into a separate company… and it might not take all that much optimism to give the shares a chance to go up a bit, given how cheap they are on many metrics, I just have trouble seeing real “breakout” potential of 1,000%+ gains just because this behemoth of a company might have a successful new product line over the next few years.

Don’t buy HPQ just because of their 3D printing technology, I find it hard to see the tail wagging that dog in the near future… but if you like HPQ at these valuations anyway, after a 25% or so drop from the highs of a few months ago (current PE is about 13, dividend yield a little under 2%), or you think that the anticipated split of the company will give them a better valuation, then maybe that 3D printing technology will give you a little extra confidence that their printing business can kick up its growth a little bit in the future.

Interested enough in 3D to jump on HPQ as a “Gen2” play? Think it’s safer or more prospective than the beaten-down former growth darlings DDD and SSYS? Have other favorite ideas to ride what’s still expected to be long-term growth in 3D printing? Let us know what you think with a comment below.


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47 Comments on "3D Printing Gen2: “The World’s Most Disruptive Growth Market is Taking Off – Again!”"

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Rita
Guest
0

I love waking up to find something new from you :). Thank you.

Carbon Bigfoot
Guest
0

Can we stop calling this printing? It is PATTERNMAKING or PROTOTYPING. When it becomes the preferred method of manufacturing we can call it PROTOPROCESS.

greenfire67
Irregular
77

Also called kellering back in the day

LostOkie
Irregular
288

Additive Manufacturing

Steve
Guest
0

Hmm. You spray material in tiny droplets. Sounds like inkjet printing to me. If it builds up instead of soaking into paper, it’s still printing technology, just not with ink.

Carbon Bigfoot
Guest
0

Sorry Steve you need to understand the process of extrusion. Material is heated and the melt is squeezed through an orifice and is deposited, not sprayed, in a patterned layer dictated by the computer program through a buffer distributor.
If anything the process should be called computer extrusion prototyping or CEP.

jack11
Member
8
Do you feel smart now, Mr. Carbon Bigfoot? Who cares what it is called? We all know about this technology and want to find ways to profit from the players in the industry that are publicly traded. Spare me the pontification unless you have some information or analysis relevant to making a sound investment. Here is my take… HPQ is beaten down and probably won’t tank unexpectedly. It is worth putting on your watch list or even placing a piecemeal limit order to start accumulating it for the dividend and in anticipation for the price action around the split of… Read more »
Carbon Bigfoot
Guest
0

Hey Jack just trying to educate the Gumshoe crowd–to one is forcing you to read it. The problem with Investors is they only understand what the shysters are telling them. This process is technically more difficult than people understand. And that’s why I respect Travis for providing as much information as he does—not just the bean counting.
It has a great future five or ten years down the pike. Jack– as Jonathan Winters once said “Mediocrity is always at its Best”.

canonfodder
Member
80

For a prototype, I had a part printed by an almost local print-for-fee company. It took the company’s printer about 6 hours to make a part that did not have a great amount of material in it. An innovation that could speed that up to 30 minutes would be very interesting indeed. We will see if HP has such speed up in the works. If so, with proper patents, they could take over the market for such printers. I will wait for more information.

carolyn hurst
Guest
0

Great I’m holding on to my d,s

Wahhab
Guest
0

There was a time when HP decided to build oscilloscopes. Tektronix was the best and brightest at that time, but HP put out a not as good product and still won the battle. They have so much money they can win without being the best. This does not mean so much for the bottom line when they are already so large, as already pointed out. I personally thought they would buy out SYSS when they had a “partnership” a few years ago, but they blew that opportunity.

Carbon Bigfoot
Guest
0

HP was made by the hand held Reverse Polish Language Programmable Calculator. Mine is in the closet somewhere.

copacetic98
Irregular
17

“Reverse Polish Notation” – gotta be correct about these and all other things! 🙂

Lannas
Irregular
849

IMHO there will never be a mass market for 3D printing. It sounds like a neat idea but you have to have a solid model to make a 3D print. The masses will never be making solid models, so models will have to be purchased unless 3D scanners get as cheap as printers. It is more likely that 3D print shops will start up where the masses can get something made when needed. I’m a retired Manufacturing Engineer with Cad/Cam/SLA, experience.

Carbon Bigfoot
Guest
0
Lassas that’s what they said about Computer Aided Drafting CAD in the 70s. In 1982 I was notified by Carrier Corporation that they were developing in concert with Hewlett-Packard, a CAD System for $40K. A comparable system was being marketed by Dietzken for twice the price. I was on the next flight to Syracuse and my Engineering Business became one of five Beta Test Stations for Carrier/HP. The quality of our work product was as good as it gets. Carrier/HP were thrilled with our “Real World 2D Drawings” which were on display at many Trade Shows. My company had the… Read more »
Lannas
Irregular
849

Carbon Bigfoot, like your name! I am not betting against HP or anyone else,
I have no skin in this game. I just think there was a lot of hype about 3D printing
being in every home like the next I-phone. I do not think there is a mass market for it.
Stock prices that we have seen for the 3D co. at the peak was all about hype. IMHO
HP will put a few of these co’s. out of business.

BE
Guest
0

“[The telephone] is a great invention but who would want to use it?”
— U.S President Rutherford Hayes (1872)
“There is no reason anyone would want a computer in their home.”
— Founder of Digital Equipment Corporation (1977)
“Everyone acquainted with the subject will recognize [the light bulb]
as a conspicuous failure.”
— Chairman of the American Lighthouse Board (1880)

Thor Johnson
Guest
0
I like how you point out that even if HP steals everything from DDD and SSYS, it’s still just a tiny bump in HP’s carcass. HP /is/ the logical company to do the job (multi-nozzle printheads). I’m interested to see what HP’s thinking; even if you have “many nozzles”, the real question is “how long per layer” * “how many layers” — Zcorp uses “many nozzles” (standard 24 inkjet afaik) to print drops of ink/glue onto a powdered bed (inkjet-onto-flour), but it takes just about as long as most other 3d printing technologies (and is fragile to boot). You’d think… Read more »
JR
Guest
0

One reason 3d stock won’t stop flying is that at some point you buy one 3d printer and create another one, another one and so on. Sounds foolish maybe but never say never.

Lannas
Irregular
849

JR: The 3D stocks have quite flying and have plunged! Look at any 3D stock.
They all peaked 18-24 months ago.
$DDD high was around $97, today it is $22, XONE high was $73 today it is $13.
This party and hype is already over IMHO.

JR
Guest
0

Should have said “one reason stock WILL stop flying”

kmoffitt
Member
7

Never.

Steve
Guest
0
The details of HP’s technology are very sketchy on Cramer’s interview as well as HP’s website. Big claims about being able to print multiple colors, strengths, elasticities and materials all in one go at 20 micron particle size, which is impressive. Not much in examples. Sounds great to go 10X faster than current speeds, and that alone would make it something of a game changer BUT I wouldn’t bet that it will be the winner in the race for speed. I think that distinction could go to this technology that starts at 25-100X faster than current speeds, and a projected… Read more »
Mike
Guest
0
I remember my grandfather telling me that the new laptop that my Big Pharm gave me in 1990 was just a fancy fad and too expensive for the masses……..I asked him to retell the story about how his grandfather told him as a kid that those Wright Brothers were wasting their time and it was just too dangerous to fly………………after my Grandfather figured out that I just tricked him into how wrong many early predictions are……………I just smiled and told him that someday soon, everyone will have a computer in their house, just as will every home have a 3D… Read more »
Lannas
Irregular
849
The PC was not for the masses until the Al Gore invented the internet. The masses did not need one at home before E-Mail . Every grand parent needed one just to keep up with grand kids. The same may happen to 3D printing, if software and technology develops to the point were grandma can scan a old lid to her favorite pot and print off a new lid. Other wise 3D printing will be only for R&D in manufacturing and for the few high tech home hobbyist. The production of the digital model must be made very simple and… Read more »
Robert Hall
Guest
0

Eisenhower invented the super highway.

Guest
Guest
0

Al Gore definitely did not invent Internet. He was still playing sand box when DOD was testing the design.

DaveR
Guest
0
My former employer was involved in commercial level 3D printing >20 years ago, including development of the specialized photo-reactive materials to be used by the printing machines. Perhaps they were too far ahead of the adoption curve as the costs were very high and the output so slow that that technology was only of interest for prototyping and production of very limited numbers of components. However, HP’s technology capabilities could change the balances considerably. For example, what if their 3D printing deposited chemically self-reactive, rapidly setting materials only where needed, and if those could include sinterable metallic “inks” which can… Read more »
Thor Johnson
Guest
0
@Mike – I agree that it will come, but I don’t understand enough to pick winners over a long term (looking for insight on that) — to use a “Printer” example, there used to be OKI, Kyocera, IBM, and a slew of others. Now those people are still around (I think Kyocera only does phones now), but the “market makers” in printers nowadays are Dell / HP [not so much anymore], Epson, Lexmark, Canon… Originally SSYS was gobbling up people (Makerbot), and I know a couple of 3D printer people whose business plan was “get acquired by SSYS”, but the… Read more »
Mike
Guest
0
Hi Thor, Please don’t look to me for stock picks as I’ve always had terrible luck and even after buying into the 3D category a few months back that category dropped dramatically! (my luck!) Honestly I watched my dad lose everything in the stock market when I was a kid and have only started studying it 3 years ago full time (retired early) and having learning of so much stock market manipulation I decided to convert my old 401K into several houses in North San Diego county in 2012 and could not be happier with that decision…….only left $20K in… Read more »
Mike
Guest
0
One more quick note on 3D printing that concerned me more than HP’s entry………I recently watched a TEDX Talk and watched some presentation on an improved way of 3D printing by some college professor and his students!!! Look it up and watch it, it was amazing and made me feel like it could make many current 3D’s co’s stocks worthless if this Professor gets some big company to buy/patent/sell this vastly faster process which works slightly differently. The video last about 20 minutes and the lecturer actually prints out a product WHILE he is talking during that short time period… Read more »
Illuminati Investments
Guest
0
Illuminati Investments

Yup, Carbon3D, their technology looks intriguing. Not public yet but they’ve got funding and could become another major competitor.

Paul
Guest
0
3D printing devices will never become consumer products. Even 100 years ago every middle class family had a typewriter, and now everybody has a printer. But almost nobody had or has a device for 3D making (like a lace or milling machine), even those also existed 100 years ago. No matter how much the prices come down, there is no demand (especially as it will never be easy to use). There is simply no parallel between 2D printing and 3D manufacturing. (Replacing a TV remote will always be faster and cheaper than to 3D print a broken battery cover). The… Read more »
Lannas
Irregular
849
koifish46
Member
20
Perhaps you should check out Sigma Labs Inc. (SGLB) They are a small company with big potential. Their product is actually the software for 3D metal printing and it is patented as “Printrite 3D inspect” which inspects metallurgical properties for accuracy in 3D metal printing. They are also going to be releasing soon, “Printrite 3D Deform” which will check for accuracy of geometric properties. They just recently acquired a 3D metal printer and will start manufacturing aircraft engine parts for Honeywell and GE. They are a penny stock listed on OTC but I suspect will apply for listing on a… Read more »
copacetic98
Irregular
17

Well, GE hasn’t yet committed to using 3D printed part in production. But from what I understand about SGLB’s process, it *may* be applicable to Carbon3D’s method (see Steve’s comment #9 above).

(NOTE: I am not an SGLB insider, nor am I a physcist or a chemist. Just a small, optimistic, underwater SGLB shareholder.)

Cathy
Guest
0

Good Info Travis, maybe it is me but seems all the hype for 3D etc. is about all hyped out till they really shock the world with something from out of this world which is hard to do in all. I can only hope that instead of being pictured the life saver that there really is a application that gets to the next level!

Thor Johnson
Guest
0
Yeah, I snorted with laughter when the market people started buzzing about it. However, there already is at least 1 “revolutionary” application: Invisilign Not hobby-3d-compatible (SLA printers only), and a lot of the work was getting the Dental->Model->Print->Ship system to scale, but IIRC, it *is* the largest volume of 3D Printing in the industry. That’s the niche – I need a custom X (or especially – a lot of individuals need a custom X), and even better if there’s a way to get from X to the solid model (dental records). It’ll never make sense for “I need a spatula”… Read more »
quincy adams
Guest
0

If I recall, we actually had 3D printing before we had the version that had all the early investors drooling. It’s called Legos.

Suri John
Guest
0

Check out these 3-D printing stocks , looking at their prices, revenues and further growth because of the wide range of applications to this technology, I think they are worth investing.
http://www.profitconfidential.com/stock-market/top-10-best-3d-printing-stocks-for-2015/

lkcg
Member
0

3D printing is just too infantile to dismiss. Our dilemma…invest now and ride the waves or wait and miss a wave or two.

hendrixnuzzles
Irregular
9719

3D Printing….I know very, very little about the sector or the players. But I was surprised at a party this week, a local jeweler said he uses a 3D printer for making custom jewelry in his home. I asked the name of the company who makes it, it was a name I have never seen.

My point is that the technology is being implemented by individuals involved in very ordinary and small scale manufacturing businesses. Don’t have any idea what the best ways to invest will be…what are your ideas ?

brysown1
Guest
0

There was 3D Expo last year of upcoming or “use” ideas, material was the number 1 problem to produce product.
A few ideas I could really see a Market for .
GE for example dedicated millions to the development of materials THEY need to produce engine parts, so far the tests go on.
Food design was another…YES “Food|, wedding cakes, special events etc.
I await that break through

Bill
Guest
0

Unfortunately, Carbon3D doesn’t quite fit the description but it is a radical new technology that will make modeling much more low cost (http://finance.yahoo.com/news/carbon3d-introduces-clip-breakthrough-technology-014000347.html). Carbon3D still appears to be privately held, so that doesn’t solve the riddle here, but it’s definitely a technology to watch in this space.

Loren
Guest
0
I recently attended a University of Minnesota / CSE (a.k.a. Institute of Technology) 50 year alumni meeting. A talk by a professor about 3-D printing had the following features. 1. 3-D printing is affordable by “people”. The teacher was buying one for herself, on a teacher’s salary. 2. Students are being trained in this technology (degree). The university must see a big future in 3-D printing. 3. Previous versions needed to create a “bridge” between parts not physically touching. Now a second nozzle applies a soluble bridge until the parts touch in upper layers. Great! 4. Different colors are possible… Read more »
aaronw
Guest
0
aaronw
Guest
0
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