Investor: 3D printing explosion a long way off

Reports of burgeoning on-demand fabrication market vastly exaggerated

The next big thing in the channel may not be 3D printing – in fact, current hype is based on exaggerated overvaluations of the technology, according to a US stock market researcher.

The market watcher, Citron Research, is so concerned that it has put out a full statement warning of a stock bubble, which in due course will obviously burst.

"Appearances have become completely unhinged from reality when it comes to the mania created in so-called 3D printing stocks," Citron stated.

"Additive manufacturing has been around for 30 years. The only thing that is new in recent years is availability of consumer-priced 3D printers, from many sources, along with a frenzy of thoughtless and shallow media attention."

Direct digital manufacturing does have a place in the industrial landscape, and the sector will expand over time, as new technology enables new apps, the firm agreed, but there is much less opportunity, growing at a much slower rate, than some pundits suggest.

The 3D printers which might be available to the channel today are only capable of producing egg cups, sex toys, hair combs and other cheap plastic fripperies, it notes.

This means the B2B usefulness of the technology remains limited, especially when the devices still cost upwards of several hundred dollars.

"A machine costing hundreds of dollars, $20 (£13) worth of materials, and hours of twiddling, to make... an egg cup? Really?," scoffed Citron in its announcement.

Instead of buying a range of plastic accessories at 10p each from China, the lucky reseller or distributor could 'print' them itself, after amortisation of the hardware, for about £20 each.

Citron Research – formerly StockLemon.com – is a stock analysis company based in California since 2001 and run by investor Andrew Left, who Reuters describes as an "influential" private investor and short-seller.

Left's team at Citron focuses on trying to expose lemons and frauds in the market -- over the years, this has resulted in a string of lawsuits, some at his expense. Currently, Left is suing a Chinese consortium for defamation of his business.

In respect of a 3D printing bubble, Citron singles out prominent player 3D Systems, which has been around since 1989, as an example.

Valuation blown sky high

According to Citron, 3D Systems' valuation has been blown sky high by the machinations of its chief executive Avi Reichental, who it describes as a master of promotional marketing.

Reichental has claimed that 3D printing will be "as big as the steam engine, computer or the internet". He also says the firm's machinery is already being used to create "about 90" of the parts in every Boeing F-18 fighter.

However, Citron notes that the products in question are supplied to Boeing via RMB Products, which buys 3D Systems kit on the secondary market and must modify them before using them to manufacture F-18 parts.

"So the truth is 3D Systems does not make one dime in revenue from parts on the F-18, not the machines, not the materials, and not engineering or other services. RMB has done no business with 3D Systems in years," says Citron.

One market commentator to have promoted 3D Systems heavily to the public is The Motley Fool, which Citron points out is a shareholder in 3D Systems as well as other players including General Electric and Stratasys.

In October, 3D Systems announced it had doubled its printer sales that quarter, raising its full-year forecast. "3D Systems now expects earnings of $1.20 (77p) to $1.30 per share on revenue of between $345m and $365m," it said.

The stock rose 140 per cent January to October. 3D Systems says its machines can create 3D prototypes of "everything from key chains to toys and aeroplane parts".

"The company has been witnessing strong demand from consumers looking to create gifts in the comfort of the family living room or garage," the company said. "Net income for the third quarter nearly doubled to $13.5m, or 24 cents per share, from $7.2m, or 14 cents per share, a year earlier."