Ethical discussions involving 3D printers seem to be top of mind for reporters these days as various media outlets report on the printing of guns and even bones by technology that was previously inaccessible to the consumer. What started out as an industrial prototyping and design tool, the 3D printer has started making its way into the home user market. Accidentally break a mug in the dishwasher? Just print another one!
Though you might not have realized it, these devices have actually been around for a couple of decades, so why are we only hearing about them now? The answer is, price. Like many gadgets and gizmos, 3D printers were incredibly expensive when they were first invented. Like computers in the 70’s or 80’s, not many people would are willing to spend $10,000 or more on a niche product. Only in the last few years has the price of 3D printers dropped enough to make them attainable by the general public. A quick Google search for 3D printers yields products that range in price from £875 to £3,100.
This technology has a definite cool factor when you think about all the ways it could be used, this leads me to think: is there an investment opportunity here?
There are two big publicly traded companies in this market, Stratasys (SSYS) and 3D Systems Corporation (DDD). In one year, the shares of these companies have gained 725% and 103% respectively. That’s not a bad return! This stratospheric rise makes you wonder, how sustainable is this growth? Is everyone going to go out and start buying 3D printers at their local Office Depot, Walmart or Best Buy?
Investors love new innovative products or sectors and they buy into them, heavily. 3D Systems has a PE ratio of 120 and a Beta of 1.8 while Stratasys sports a PE of 168 and a Beta of 1.3. Both these companies are priced for growth and volatility. High growth with high volatility means one thing, risk. One or two pieces of bad news and these stocks could come crashing back down to earth.
I think there’s a lot of hype on this topic these days and the market might be getting disconnected from reality. I simply have not seen a 3D printer in anyone’s home, nor have I heard of anyone talking about buying one. With prices as high as I mentioned above, most people would rather spend their hard earned money on something else. Hopefully paying down debt, right?
If these printers can be made even more affordable then their footprint could skyrocket. The whole industry would also need to become more consumer oriented and mature. With standard printers we started with the venerable dot-matrix and moved on to laser, inkjet and color laser printer. Features were added along the way including multifunction (print, copy, scan, fax) capabilities and wifi connectivity. It seems like we are still in the dot-matrix days of 3D printing at the moment.
What might these features be for 3D printers? For one, different materials could be used. From what I gather so far, only plastics can be used as material for printing because it can be heated and molded with relative ease. Imagine if you could make some adjustments to the printer, change heads and then be able to print objects in rubber, metal, stone, etc. Then the number of uses would really start to multiply.
Like PCs and printers of yesteryear, size is also an issue. 3D printers have been getting smaller and smaller, if they are going to make it into mainstream use, they need to get smaller still, and easier, to use.
As with any new technology, it takes time for adoption to ramp up. As long as people can find new and interesting ways to use 3D printers and prices come down, the product will become more compelling. On the investing topic, there are companies out there that you can buy a piece of which will let you take part in the 3D printing phenomenon. Just keep in mind that these companies are highly volatile and very risky.
Andrew is a Canadian personal finance and investing blogger who recently moved to London, England. He has a background in technology and a passion for travel. His blog, She Thinks I’m Cheap aims to help Canadians build wealth by sharing facts, stories and advice. He is also running a giveaway contest where $200 is up for grabs. Read here for more information on the True Money Stories Giveaway!