Short interest in 3D Systems Corporation (NYSE:DDD) surprisingly declined late last month, falling by about 6%. So does this mean that the company’s stock has bottomed out? Or is more hurt ahead? Seeking Alpha contributor AtonRa Partners believes short interest will start climbing again.

Has 3D Systems Corporation Hit Bottom?

Short interest in 3D Systems still falling

In the first half of September, short interest in 3D Systems fell by 2%. By the end of September, it had declined by another 6%, falling to about 33.63 million shares or 32% of the float. The firm suggests that this could mean that some short sellers think 3D Systems stock is about to bottom out.

Shares slumped down below $45, compared to the high of $97 per share earlier this year. AtonRa sees the stock falling even further though, as the firm has a $26 per share price target on it.

Competition risk for 3D Systems

The firm notes that competitors keep ratcheting up the pressure on 3D Systems. Hewlett-Packard Company (NYSE:HPQ) hopped on the 3D printing bandwagon last week, and the firm sees this as a big problem for 3D Systems and its peers, calling HP “a major threat” to them.

AtonRa notes that HP has a big printing patent portfolio and already a massive distribution plan. Hewlett-Packard also claims that it has some kind of breakthrough in 3D printing that it is preparing to release. Analysts at the firm believe that the expiration of some important patents between this year and 2017 will result in more competition and pressure on prices all across the 3D printing industry.

Why short interest in 3D Systems could rise again

When Hewlett-Packard releases more information on its 3D printing systems, the analysts believe short interest in 3D Systems will start rising again. They suggest that investors may bet on a negative impact on 3D from HP—but only if the company is able to deliver on its promise of “breakthrough technology.”

They also believe short interest may increase heading into 3D Systems’ third quarter earnings report because investors may see it has a big short term risk. They point out that the company’s revenue target for the full fiscal year, which was for between $700 million and $740 million, implied that the company would see a growth acceleration rate of between 40% and 50% in the second half of the year.

That’s compared to the 25% growth rate in the second quarter. And it’s even though the company has difficult comparisons, with 50% growth in the third quarter of last year and 52% growth in last year’s fourth quarter.