As 2023 comes to a close, it is time to summarize the performance of publicly traded 3D printing companies and estimate their trajectory for the upcoming year. Overall, this year posed significant challenges for investors who remain optimistic about the potential of Additive Manufacturing. However, they also recognized the necessity for valuation adjustments. Consequently, a prevailing negative trend impacted the stocks throughout the year.
Data as of December 19, 2023
A few notes and takeaways from the above table:
The company with the lowest market cap is Voxeljet
The company with the highest market cap is Xometry
The worst-performing stock of this year is Fathom
The best-performing stock of this year is Proto Labs
There are only two companies with a market cap of over $1 billion
Only three stocks were positive this year
Three stocks are below $1, receiving continued listing standards notices
If we examine the performance over the longer term of 5 years, the first thing we notice is that all stocks are on the negative side, with half of them experiencing a crash of over 86%! Fathom remains the worst-performing stock, while Stratasys and 3D Systems have suffered the least.
Against the backdrop of the Covid-19 pandemic during 2020-2022, 3D printing stocks surged up to 10 times their original values, driven by the belief that Additive Manufacturing is a great solution to supply chain challenges. During this period, a few companies went public via SPAC mergers, capitalizing on the high valuations of veteran 3D printing companies.
However, 2023 marked a significant turning point from that perspective, bringing valuations back to normal levels. Investors came to understand that the Additive Manufacturing revolution is indeed on the horizon, but unfolding at a slower pace than initially expected.
Predicting the performance of stocks is always a tricky thing, but let's try to understand the business environment we are expected to be in:
2024 is an election year in the USA, with a plan for three interest rate cuts by November. In most cases, an election year is positive for stocks, so we can expect some tailwind from the market.
Due to the very low valuations and negative cash flow of many companies, it’s fairly reasonable to estimate that we will see mergers and acquisitions in the market, and not much, if any, new capital raising for existing publicly traded 3D printing companies. Companies such as Velo3D, Desktop Metal, and Markforged are good candidates for mergers, while Nano Dimension, with its $700 million in cash, is set to be on the acquisition side.
Next year, one of the main goals of leading companies will be profitability. Cutting down employees, selling unprofitable business units, and restructuring their channel network and go-to-market strategy will be part of the adjustments companies will have to make.
The main conclusion from the events of 2023 and the expected business environment in the market for 2024 is that the strong ones will become stronger, and the smaller ones will have to make tough decisions. As proven in the past several years, achieving organic growth is challenging, while strategic mergers and acquisitions could be the main path to higher revenue and profitability. Thus, companies with cash in their pockets, such as Stratasys, 3D Systems, and Nano Dimension, are expected to make moves on companies with low valuations and available cash.