The 3D printing market is rife with misconceptions. Major hype and subsequent drops in the share prices of big companies have made many investors shy away from this dynamic market.
The Investing News Network sat down with Dr. Elena Polyakova, an expert in 3D materials and co-CEO at Graphene 3D Lab (TSXV:GGG), to get the real scoop on the 3D printing market. Over the course of the conversation, she broke down the many myths about the industry, discussed where the market is headed and explained the best way to invest in 3D printing.
A brief history of 3D printing
While 3D printers might sound cutting edge, Polyakova explained that actually 3D printing is “a quite old technology developed more than 30 years ago.” Companies like Stratasys (NASDAQ:SSYS) and 3D Systems (NYSE:DDD) were the first entrants into this market which, for a long time, remained a very specialized field.
Indeed, according to Polyakova “up to around 2005, 3D printers were extremely slow and usually the price was high, so this technology was only used by a small group of professionals. For example, it was widely used in aerospace before, and automotive industries for prototypes.”
However, that began to change about a decade ago as more and more students, DIYers and enthusiasts started to enter into the space. The expensive machines being produced by 3D Systems and Stratasys were not particularly accessible to generalist users, and tended to shut them out of the market. It was thus revolutionary when smaller companies like Makerbot (since acquired by Stratasys) created products specifically intended to fill this void in the marketplace.
Polyakova likened this transition to the computer market in the 1970s, when the stronghold of a few corporate giants was eroded by small new tech companies. Today, the field of 3D printing has absolutely exploded. Where there were maybe five companies in this space a decade ago, Polyakova estimates that there are now in excess of 1,000 companies competing in this market.
Dispelling misconceptions about the market’s downturn
One quick look at the 3D printing market shows that it isn’t doing as well as it once was. However, decreases in companies’ share prices don’t tell the full story of the market’s rise, fall and future growth.
The downturn in the market can be attributed to a number of factors. With the rapid influx of new companies came a dilution of the major players’ market share. Because “large public companies are losing ground to small private companies, stock is going down,” said Polyakova.
This downturn was exacerbated by all of the hype surrounding the industry. Polyakova explained that the market was in a bubble, and “the price of stock had nothing to do with financial results.” When investors saw share prices falling, they didn’t care what the reason was and wanted to get out of the sector as quickly as possible.
Now, the picture is changing for investors. “In terms of stock prices for major players, I think that we have got close to the bottom, and we are slightly oversold right now,” said Polyakova. That’s good news for investors who want to get involved with the big players once again.
However, these major companies may not be the best place to look in terms of big, fast returns on investment. According to Polyakova, “in this case, somebody looking to make money quickly should look to new companies with new developments, or new developments at old companies.”
The best way to invest in 3D printing
Investors still have to be wary about where they are investing their money, however. Just because the market is seeing “a lot of small startups with a lot of potential” doesn’t mean that every one of those companies will go on to do great things. Indeed, Polyakova cautioned that “right now, there are too many small companies for the market,” and there is no clear winner emerging.
So how can investors protect themselves by choosing the best companies to invest in? Technology comes first for Polyakova, who encouraged investors to “look for companies with cutting-edge technology.” In particular, the industry needs to see faster technology (to integrate more seamlessly into companies’ production processes) and a greater variety of sophisticated materials. Already, the market is headed this way with “an explosion of development in materials.”
In particular, Polyakova identified Carbon3D as a player to watch in the 3D printing market. According to the company’s website, its “technology produces polymeric parts that have the resolution, surface finish and mechanical properties required for end-use.”
And Polyakova’s own company, Graphene 3D Lab, is another interesting choice for investors. The company is “focused on the development and commercialization of technologies which improve the capabilities of 3D printing. The company’s go-to-market product, Conductive Graphene Filament, brings users the ability to 3D print circuitry and sensors for electronic applications.”
All in all, Polyakova’s message was clear. Despite some downturns for the industry’s top players, the 3D printing market is growing, innovating and thriving today. Therefore, the best way to invest in 3D printing is to educate yourself in this space, and to turn to those companies with the most cutting-edge technology.
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This article was originally published on 3D Printing Investing News on January 25, 2016.
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Graphene 3D Lab is a client of the Investing News Network. This article is not paid-for content.