“I worry as it (3D Systems) continues to rise, that at some point, the valuation gets ahead of the hype,” Meeks said.
Grandeur Peak Global Advisors LLC, which sold its stake in 3D Systems in June, said the company’s acquisition spree could be dangerous. 3D Systems has made six acquisitions this year, and eight in the last 12 months.
The company’s revenue rose 52 percent to $83.6 million in the second quarter but organic revenue growth — stripping out the acquisitions — was just 20 percent.
“My honest belief is that they’re going to have a misstep,” Grandeur’s Spencer Stewart said.
3D Systems reported a net profit of $8.3 million for the quarter ended June 30, a fall of 38 percent from the same period year earlier. But the company’s market value jumped to $2.6 billion from $1.68 billion over the same period.
Net profit at Stratasys, which is based in Eden Prairie, Minnesota, fell 24 percent to $3 million for the quarter ended June 30, but its market value grew 51 percent to $1.08 billion.
Others see market growth bringing the valuations into line.
End-markets are opening up so growth will continue in the near future, said Dougherty & Co analyst Andrea James.
There are those who think 3D printers may even be able to someday produce food — or, more worryingly, guns.
BIG PLASTIC HEART
Worries about stock valuations are of little concern to consumers like Tom Nardone of Birmingham, Michigan who bought a MakerBot Replicator for $2,000.
Nardone, who runs a marketing company, believes these printers hold great potential for making homemade toys, or as toys themselves.
“Some company will launch this device and it’ll be $199 and your kids will be begging you to buy them.”
3D Systems operates an online design platform, Cubify.com (cubify.com), that works like Apple Inc’s iTunes and Google Inc’s Android app store.
The owner of a printer can download patterns for jewelry, toys, lamp shades and more — many of them created by independent developers.
Taking a cut of those sales generate recurring revenue for 3D Systems, as does the sale of consumables and a service where users can order a printed product and get it delivered.
Others have gone a more open route. MakerBot offers open source design and software downloads for free on its Thingiverse online platform (www.thingiverse.com) as it focuses on sales of printers and printing materials.
Copyright holders will cringe, but people are already using printers to make Star Wars battle cruisers or a cheaper alternative to Lego or Mattel Inc toys.
One thing Nardone realized right away, though, is that the process is slow — about 45 minutes to make something the size of an egg, and about four hours to create an item the size of a soft drink can.
Items he has made so far include shoe lifts for his young daughter and a back scratcher.
“The longest it took to make something was nine hours, it was a big plastic heart I made for my wife,” he said. “When we woke up in the morning it was still printing.”
(Editing by Rodney Joyce and Ted Kerr)
(sruthi.ramakrishnan@thomsonreuters.com; Within U.S.+1 646 223 8780, outside U.S. +91 80 4135 5800; Reuters Messaging: sruthi.ramakrishnan.thomsonreuters.com@reuters.net)
