Shares of 3D Systems are down over -32% year to date, as the 3D printing company continues to struggle in the emerging technology industry. While 3D printing has high hopes over the long term, consumers and investors recognize that the current environment is not a sweet spot for this expensive, bulky, and emerging technology. Most consumers do not understand what 3D printers are capable of and, ultimately, why someone would need one of these printers in their home. With this in mind, 3D Systems is falling to new lows as the company announces it is delaying its consumer 3D printing machines amid concerns over lack of demand for the new device. These developments have prompted Barron’s to forecast another 30% drop.
Weak first quarter earnings and guidance delay weigh on 3D Systems
On May 6th, 3D Systems reported first quarter earnings of -$0.12 per share on revenue of $160.722 million. To make matters worse, management withdrew guidance, further throwing uncertainty on the bullish thesis. Analysts have slashed 3D Systems and its outlook. At the beginning of the year, analysts were set on 2015 earnings per share estimate of $1.02 per share. However, as of last week, that figure is now $0.58 per share for full year 2015. UBS is one such bank that recently downgraded 3D Systems to “sell” from “neutral” and cut its price target from 32 to 20.
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3D Systems stands to continue losing market share
Aside from poor earnings, weak demand, delayed product launches, delayed guidance, 3D Systems has another massive problem on the horizon: Hewlett-Packard Corporation. It has been well reported and covered that in 2016, HP will be entering the 3D printing industry. This massive new competitor entering the market has considerably hurt outlook for the smaller 3D printing companies. Many brokers and analysts see the 3D printing industry being dominated by HP once they arrive on the scene. HP will be successful because it is already a brand name that people know well, they are extremely well capitalized and have easier access to capital than smaller companies like 3D Systems. These two factors will considerable continue to hurt 3D Systems and the rest of the industry.
Overall, 3D Systems continues to collapse in 2015 as poor earnings, lack of demand and delays continue to hurt the company’s finances and outlook. Additionally, with a massive new competitor coming into the marketplace, analysts generally agree that 3D Systems will continue to lose market share to HP once they arrive on the scene. For now, 3D Systems is the ugly stepchild and the company is certainly not helping itself.