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Writer's picture3D Alliances

Game over, or soon to recover?


In the past few months, I have seen several articles discussing the decline of the AM printing industry. Some imply the industry is past its peak and that the game might be over, while others are more optimistic about the future of additive manufacturing. All present valid thoughts and insights, addressing the main question everyone is asking: what does the future hold for additive manufacturing?


The state of the AM industry

First of all, let’s face it – we are in challenging times. If we take 3D Systems' stock as a reference to the entire industry, one of the first publicly-traded companies since 1988, the current price reflects the whole story. Valuations of companies are very low, SPACs and IPOs from the past five years were not successful, investors lost a lot of money, and as of today, funding for startups is very challenging.

Image source: Yahoo finance


In addition, the transition from prototyping to manufacturing is taking much longer than expected, with many existing AM technologies still more suitable for producing small numbers of parts and limited in scaling to real manufacturing. Furthermore, in recent years, we have not seen new AM technologies that have made a real paradigm shift, offering a genuine alternative to traditional manufacturing methods.


Recovering from a Bubble Burst - the dot-come case

The AM industry is not the first, nor will it be the last, to go through this process – starting small, picking up, experiencing hype, a bubble burst, and then seeking recovery. Some industries that have gone through the same cycle disappeared over time, while others found their way back to the center of the stage.


To understand what the future might hold for AM, as an analogy, I suggest examining the dot-com bubble burst story in the early 2000s. It happened due to a combination of several factors:


Overvaluation: Many internet companies, especially those without solid business models or profitability, were heavily overvalued. Investors poured money into dot-com startups based on the hype and potential of the internet rather than on fundamental financial metrics.


Speculation: There was widespread speculative trading, with investors buying stocks of internet companies purely in the hope of quick profits. This led to inflated stock prices disconnected from the companies' actual performance or prospects.


Lack of Profitability: Many dot-com companies focused on growth and market share at the expense of profitability. They spent heavily on marketing and infrastructure without generating sustainable revenue or profits.


Unsustainable Business Models: Numerous startups had unproven or unsustainable business models. Many relied on advertising revenue or expected to monetize user bases in ways that never materialized.


Market Saturation: The rapid influx of new internet companies led to market saturation. Many companies were competing in the same space, diluting potential profits and market share.


Investor Panic: As some high-profile dot-com companies began to fail and report significant losses, investor confidence waned. This led to a sell-off of dot-com stocks, causing stock prices to plummet.


Credit Crunch: As the bubble began to burst, access to capital became more difficult. Venture capitalists and investors became more cautious, making it harder for dot-com companies to secure additional funding to sustain operations.


Regulatory and Economic Factors: The Federal Reserve's interest rate hikes in the late 1990s to combat inflation also played a role. Higher interest rates made borrowing more expensive and reduced the availability of investment capital.


The combination of these factors led to a sharp decline in the stock prices of internet companies, resulting in significant financial losses for investors and the eventual collapse of many dot-com businesses. Sounds familiar?


If we examine the chart of the Nasdaq during this event and 20 years later, it took two years to reach its lowest point, losing almost 80% of its value. It then took another decade to show signs of recovery and another three years to reach its peak again and fully recover. The rest is history…

Image source: Yahoo finance


If we go back to the 3D Systems stock chart, we can notice that it took the stock two years as well to drop from its peak point in 2014 to the lowest point in 2016, losing over 90% of its value. As of today, we are 1.5 years away from completing a decade from the lowest point set in 2016.

Image source: Yahoo finance


What can we learn?

Take a deep breath :-) Am I implying that in 2026 the industry will start recovering and accelerate in the following years? No. The internet is not 3D printing, and the Nasdaq index is composed of different types of tech companies, not only the internet. It’s not a fair comparison.

 

What we can agree on is the following: Additive Manufacturing has a future. It will not disappear tomorrow, and not in 10 years from now. It will continue to evolve and grow, finding new and better ways to offer manufacturers cost-effective digital manufacturing solutions for more and more applications.

 

In the background of the current events in the industry of M&A, successful funding for AM companies that are purely focusing on manufacturing solutions, and the continuous growth of AM services delivering millions of 3D printed parts every year, we can fairly assume recovery is only a matter of time. Yes, for many companies it will be a painful process, and some of them will not make it, but I believe the industry will find its way back to the glory days, and investors will come back again and invest, same as they did with interment companies.

Image source: wikipedia

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