3D Printing - Capitalism at its finest, Real or just a fad?

Justin Courtney, Managing Director, Stephens Inc.
382
647
122

Justin Courtney, Managing Director, Stephens Inc.

3D Printing is real. I have a figurine of myself sit­ting on my desk. I have a larger print of just my face as well. It’s kind of creepy. President Obama highlighted the technology in his 2013 State of the Union address. Walmart CEO, Doug McMillon, brought 3D printed figurines of his executive team to the company’s 2014 share­holders meeting. Amazon recently filed a patent for mobile 3D printing delivery trucks. What you may not know is that the market capitaliza­tion of publicly traded 3D printing companies exceeds the total size of the market.

Additive manufacturing is the offi­cial term and is probably more accurate as most technologies are really just 2D printing in layers. You have plastic applications that are used largely for prototyping, tchotchkes, and other novel applications. But, I have seen parts as large as a car bumper being printed. Metal printing is much earlier in its infancy, and a part the size of a baseball is considered pretty big. Companies like GE are now printing fuel nozzles for jet engines that can’t be manufactured any other way. This is just one of many examples of the emerging opportunities for additive man­ufacturing applications.

As investment bankers, we connect investors with invest­ment opportunities. Growth investors have shown plenty of appetite for 3D printing stocks. Only a couple of years ago, there were only two ways to invest in the space, 3D Systems and Stratasys. Today, there are at least a dozen ways to invest in it.

This chart highlights the publicly traded 3D printing companies but it comes with a disclaimer: nothing in this article is intended as investment advice, and you should consult your financial advisor before investing in any of the companies mentioned here.

This is where capitalism comes into play. 3D Printing isn’t new despite the newly founded attention. It’s been around since the 80s. Sure, machines have evolved, and material selection has improved. A few key patents have rolled off making way for lower prices. But the influx of capital is what will make the step change in technology a reality. Companies were going public at dot com valuations and getting acquired before ever showing a profit. They are raising huge sums of venture capital; it’s all over the news. Blogs abound. Most major ecommerce sites now offer custom, 3D printed products, and many offer printer packages, replacement supplies and service plans.

Carbon3D, the newest name in 3D printing, just announced a breakthrough technology that is 25 to 100 times faster than conventional 3D printing. They also disclosed significant investments from Silver Lake and Sequoia, two well-known venture investors.

Innovation will bring opportunities and challenges, and you better think long and hard about the implications to your business. A recent McKinsey survey of manufacturing executives indicated that 40 percent of respondents were not familiar with 3D printing beyond press coverage, yet 55 percent indicated that the technology is or could be relevant to them in the next three years. Key themes that will come from 3D printing include mass customization, weight reduction through complex geometries, and labor reduction via elimination of assembly, reduced inventory by printing on demand, and faster times to market for new products.

According to Wohlers Associates, worldwide 3D printing revenues in 2014 were just above $4 billion. If you recall, the total market capitalization of just the publicly traded 3D printing companies is over $6 billion, and that excludes the value of many large privately held businesses. Wohlers is expecting the market to triple to exceed $12 billion by 2018. We think it could easily penetrate 1 percent of the global manufacturing market, which is roughly $10 trillion, putting the near term potential for 3D printing to exceed $100 billion. McKinsey estimates that the global economic impact of 3D printing could reach $550 billion by 2025. Is it relevant to you yet?

Now back to the story line. It’s real for sure, and more than just a fad. Global supply chains will be disrupted. Data storage and intellectual property protection will be a mess. Products will be created that were never before even conceived. Procedures for design and product architecture will be re-written. This is just the beginning of the next industrial revolution.

This article was prepared for informative purposes only and is not a solicitation, or an offer, to buy or sell any securities. Information contained in the article was derived from sources considered reliable, but has not been independently confirmed or verified. The article will not be updated if additional facts come to light or if the opinions of the author change in the future. The article does not purport to be a complete description of the securities, markets or developments referred to therein.

Read Also

Beyond Data Breaches

Bryan Salvatore, President, Specialty Products, Zurich North America

The Rise of Banking Biometrics

Artem Tymoshenko, CEO, Maxpay LLC