A US-based stock market watchdog, Citron Research issued a warning, saying the entire hype around the 3D printing business was a myth. It was a bubble waiting to explode.
Oops. Within 24 hours, this fledging commercial business went from pure euphoria to a hangover state. Stock markets of companies making or selling 3D printers went from a high on Wednesday at Wall Street, in the wake of Obama’s remarks, to a low on Thursday.
Here’s how the drama unfolded:
The US President, in his address to the nation, spoke of creating new jobs and the return of manufacturing to America. While on it, he said, “There are things we can do, right now, to accelerate this trend. Last year, we created our first manufacturing innovation institute in Youngstown, Ohio. A once-shuttered warehouse is now a state-of-the art lab where new workers are mastering the 3D printing that has the potential to revolutionize the way we make almost everything. There’s no reason this can’t happen in other towns. So tonight, I’m announcing the launch of three more of these manufacturing hubs, where businesses will partner with the Departments of Defence and Energy to turn regions left behind by globalization into global centres of high-tech jobs. And I ask this Congress to help create a network of fifteen of these hubs and guarantee that the next revolution in manufacturing is Made in America.”
President Obama’s open support for 3D printing sent share prices of companies in the business, up. ExOne Co. (US: XONE) shares were up more than 6%, 3D Systems Corp.(US:DDD) shares were up more than 3% and Stratasys Ltd.(US:SSYS) shares were up 2% in early trading.
But even as players from this fledging industry may have raised a toast to the US President, little did they know what was coming next. By Thursday, the California-based Citron Research released a report, warning that some of the companies into 3D printing were overvalued. What was even more shocking was that the report said 3D printing and its accompanying brouhaha could be hype.
That was enough for the stocks to go down. Among those companies whose shares fell on Thursday was 3D Systems Corporation (DDD.N), the biggest listed U.S. 3D printer maker. So did shares of Stratasys (SSYS.O) and ExOne (XONE.O).
So why were the shareholders perturbed? Well, some may have not heard of Citron Research but when it comes to monitoring the stock markets, players take this agency very seriously. It is actually a website run by investor and well-known short-seller Andrew Left. In its report on 3D technology, it has said the makers of 3D printers in recent years had turned an evolving technology used by manufacturers for over two decades toward consumers, offering the prospect of producing everything from toys to tools in the home.
The report further said “appearances had become completely unhinged from reality when it came to the mania created in the 3D Printing stocks.” Behind every good bubble there is a good promoter, in this case, there was the CEO of 3D Systems Abe Reichental, it added.
Citron Research has been publishing columns for over 12 years, making it one of the longest-running online stock commentary websites. In these years, it has focused on stocks that are fraud or intentionally overvalued. The website even claims to have forecast the 1999 dotcom bubble.
[Image Credits: 3DPrintingIndustry]