Shares of the two biggest pure-play 3D printing companies, 3D Systems and Stratasys, lost 8.8% and 7.4%, respectively, on Friday the 13th, as competitor HP announced full color and metal 3D printing are in the works for 2018. So far in 2017, 3D Systems stock has lost 10.1%, while Stratasys has gained 29.4%.
HP entered the enterprise 3D printing market last year, when it launched two polymer 3D printer models powered by its speedy Multi Jet Fusion technology: the Jet Fusion 3D 3200, aimed at prototyping applications, and the more powerful 4200, geared toward short-run manufacturing applications. At the time of the launch, HP also announced it was partnering with top companies such as Nike, BMW, Johnson & Johnson, Autodesk, Jabil Circuit, Materialise, Proto Labs, Siemens, and Shapeways, as well as a number of materials manufacturers.
At its annual analyst meeting on Thursday, HP said its 3D printing business is experiencing “significant momentum.” Within a year, the company said it’s garnered customers that are leaders in key verticals, sold 3D printers to repeat customers, generated some multiple orders, engaged with more than 50 materials manufacturers — unlike 3D Systems and Stratasys, HP has an open materials platform — scaled out to all geographic regions, and partnered with more than 65 resellers.
Moreover, the company plans to not only continue to expand its polymer 3D printing business, but also enter the metal 3D printing market which has been the fastest-growing space in the 3D printing realm in recent years. Madison.com thinks this is what drove down the stock prices of its main competitors and this is a credible – although partial – explanation.
In fact when you look at the stock comparison below, the dip in SSYS and DDD corresponds to a rapid gain in HPQ’s stock value. Granted, HP produces more than 3D printers but its seems safe to say that the weight of the “3D printing for production” hype is now resting on its shoulders.
It’s obviously not good news for 3D Systems and Stratasys that their deepest-pocketed competitor appears to be making good progress in its nascent polymer 3D printing business, and is planning on entering the metal 3D printing market in fiscal 2018. When the latter occurs, no part of 3D Systems’ and Stratasys’ businesses will be insulated from competition from HP.
Back to Reality
The reality of the 3D printing market, however, is much more complex than it may appear to Wall Street investors (as we painfully learned in 2014). While 3D printing for production represents the future of 3D printing and the future of manufacturing, today almost the entirety of the 3D printing market is prototyping applications. In this segment, with yearly revenues for around $700M and $600M respectively, Stratasys and 3D Systems continue to represent by far the largest 3D printer suppliers, together with privately owned EOS.
3D Systems may effectively be threatened by HP for its industrial SLA and SLS businesses, but only to a degree, since both SLA and SLS can offer a much wider range of materials today ad much larger 3D printer sizes. In reality 3D Systems should probably be more concerned with affordable and proficient Chinese systems such as UnionTech’s or Shining3D’s. However, Stratasys multicolor, polymer and metal businesses represents a much more long term objective for HP.
As Madison.com pointed out, Stratasys offers metal 3D printing services (mainly – but not only – through the acquisition of Solid Concepts), however, perhaps more importantly, the company has formed a strong partnership with Desktop Metal, which already provides a metal desktop 3D printing solution and is currently working on a production metal binder jetting technology that in my opinion will be similar to HP proposed metal AM process.
Stratasys’ polyjet Connex 3 full color 3D printing technology is also very different and has a different target from HP’s. Polyjet is – and is expected to remain – a high-end, expensive and very high-resolution process for creating more and more advanced prototypes, while HP’s technology will be a lower resolution full color process based on mainly one material (for the near future) which uses end use thermoplastics (mainly nylons). Both present strengths and weaknesses however they are hardly targeted at the same customers.
It remains to be seen if Stratasys will be able – or will want to – evolve polyjet materials to the point where they will be used for end-use products. Nevertheless prototyping – and designing for additive – will likely remain AM’s number one applications for the near and medium term future. While this may not represent an attraction to Wall Street investors, it does indicate that Stratasys’ business is not going to disappear anytime soon (as the expansion of the new HQ seems to indicate).