I think we can all agree that 3D printing is a breakthrough technology that will forever change the manufacturing industry.
It’s reshaping how things are designed and made around the world, from massive assembly lines to small batch producers, and even to small hobby shops.
For many investors the focus remains on home use. Understandably, the potential to have a 3D printer make all sorts of random things for the average Joe seems exciting. Need a lawnmower part? That’ll just take 10 minutes. Hinge pin? Five minutes.
Certainly, the potential for home use of 3D printing is huge. And within a decade I expect desktop 3D printers will be commonplace in homes across the U.S.
But the technology is likely to have a far bigger impact in the industrial sector. Massive multi-national corporations are increasingly using 3D printing technology where it matters most – in production lines.
The benefits of greater speed, tighter tolerances and lower costs mean that 3D printers will be fully integrated into manufacturing lines around the world within a few years.
It’s not just about rapid prototyping of a few units anymore. It’s about dramatically reducing costs and increasing speeds to make high volume products ranging from the simple to the complex.
General Electric (NYSE: GE) is already using 3D for at least 10% of its manufacturing, and says that 50% is a realistic target in five years. Lockheed Martin (NYSE: LMT), Chrysler (NYSE: FCAU) and GM (NYSE: GM), just to name a few more, are also jumping on board.
The cumulative mass of companies moving in this direction means exponential growth in the 3D printing market is on the way.
Today’s $4 billion 3D printing market is puny compared to where it’s likely to be in just a few years.
It’s likely that the market will swell to between $12 billion and $21 billion by 2020. McKinsey has even stated it sees a $180 billion to $490 billion market by 2025. That implies a market that will grow by 50 to 130 times over the next decade. That’s huge.
It’s hard to precisely quantify the potential. But one thing is clear: advances in printing nozzle technology, printing materials (plastic, wood, metal, etc.) and printer software will power rapid adoption rates across nearly all industries – from medical, automotive and aerospace to energy and chemical.
For good reason this potential has made 3D printing a hot topic. And for a period it made 3D printing stocks even hotter.
Almost all of the publicly traded 3D printing stocks raced higher as a world of investors learned more about this market’s accelerating growth. From 2010 to the end of 2013, 3D Systems (NYSE: DDD) rallied over 2,000%. Stratasys (NASDAQ: SSYS) soared 640%.
The hot market led to several public offerings, too. ExOne Company (NASDAQ: XONE) rallied over 300% after going public in late 2013.
These investments became almost a no-brainer – anybody that didn’t own a 3D printer stock was “missing out.”
Or were they?
In the fourth quarter of 2014, something happened. The market stopped loving these stocks. The honeymoon came roaring to a halt, and the once-hot stocks melted down.
It appears now that the 3D printer market, or at least the stocks, got ahead of itself. Maybe lofty valuations for these stocks just got too high. Or growth expectations just seemed too rosy.
But regardless of the reasons that cut these stocks down to size, one thing remains clear if you follow the industry: the world is every bit as excited about the potential of 3D printing today as it was at any time over the past three years.
The stocks have just fallen out of favor. I think it’s because there is a big shake-up coming in the 3D printer industry.
The time of the “little guys” is coming to an end. Big companies are moving in as the industry moves from “disruptive” to sustainable growth.
Over the next 12 months I expect there to be major, market-moving announcements related to 3D printing. And we’ve just published a report to let you know how to play it. To learn more, click here.