Seeking Alpha

3D Systems turns negative after Tilson makes short case

  • "DDD is one of so many unbelievably great shorts out there right now.," says Whitney Tilson in his latest note. His comments have led 3D Systems (DDD -0.8%) to turn negative, after initially trading higher in response to FBR's coverage launch.
  • Tilson criticizes 3D's multiples - shares trade at 17x trailing sales, 64x EBITDA, and 63x 2014E EPS - and calls the company a better short than it was when Citron Research declared it one, given a 26% rally and (in Tilson's view) deteriorating fundamentals. 3D recently raised its 2013 revenue guidance, but lowered its EPS guidance due to aggressive spending plans.
  • The talkative hedge fund manager admits he has "sure taken my lumps on the short side recently," but nonetheless calls the current market "the best environment to find great shorts since March 2000 (even better than Oct. 2007).”
Comments (26)
  • Excellent. Please short it. More gasoline for the fire :)
    3 Dec 2013, 12:38 PM Reply Like
  • What a pencil head.


    Like their growth potential is suddenly limited.
    3 Dec 2013, 12:47 PM Reply Like
  • Whitney has egg on his face. He is now trying to talk the stock down. When DDD & SSYS report year end results he will have more egg on his face.
    But the stock is still volatile and we will see many ups and downs over the next couple of years.
    3 Dec 2013, 12:54 PM Reply Like
  • DDD may be overvalued on "fundamentals", but these stocks trade on sentiment which is massively positive for the sector. And there really are some dogs in the sector (VJET, anyone?), just not DDD or SSYS.


    In general I'd say, shorting into a bull markets is a beginner's mistake. Based on Tilson's analysis we would be short AMZN, NFLX, et al. The bull market adage to keep in mind is: "Go long or get out of the way, but don't sell short."
    3 Dec 2013, 01:05 PM Reply Like
  • "I believe that it is virtually certain that Google's stock will be highly disappointing to investors foolish enough to participate in its overhyped offering -- you can hold me to that." - Whitney Tilson on Google around the time of its IPO


    Tilson gives value investors a bad name. If you don't understand an industry, don't opine. If you try to use the same criteria to value Google as you do McDonald's, every growth stock in the tech sector is going to appear overvalued. Most are, but some aren't; Tilson has no way of distinguishing between the two.
    3 Dec 2013, 01:19 PM Reply Like
  • I was wondering about the past record of Mr. Tilson. Thank You.
    Now I have more confidence in 3D with his light on.
    4 Dec 2013, 03:17 AM Reply Like
  • Oh great, I just had to take a copy of that prognostication of his you just posted. Hahaha... Now, after causing investors to miss out on Google's climb to over 1,000 dollars a share, from the 85 where he assured investors collapse was eminent, he's back to cause us more anguish.


    I'd take his missive here as, the reverse of "damned with faint praise", to "praised with trivial damnation".


    He's trying to spin the figures that show the early investor confidence in the technology, as investors having gotten too far ahead of themselves. Ignoring completely the fact that, there are too few shares available, for investors who want in at this early stage, to be getting them at lower prices.


    When I got in they were saying that the price had gotten way out of whack with reality, the stock was at 69+ per share, and they were explaining that it would take years, if we were lucky, for the company performance to justify such a price. Now I've doubled my money, why? Because it was way to early for the company to have performance commensurate with the public's recognition of how necessary this technology is sure to become over the next few years.


    To get in on the ground floor, you have to pay the price that you have in front of you. Google proves that point quite nicely. Those enamored of the balance sheet analysis being provided at that early time, were missing the overall point of what the company could do, and would very well be doing later. How could Mr. Tilson have missed such an important concept?


    Well, the shorters have been holding some 28 million shares short, since before I got in at the last 69 dollar peak. They've been taking quite a beating holding onto their positions, so it's hardly surprising that a welter of bad news reports have been following 3d printing stocks around. The tragedy here is that people listen to these analysts. Because, I've been reading many of these offers on other stocks on Seeking Alpha and I see way too many touting stocks that collapse in the next few days, while they knock companies that continue to appreciate, even wildly, subsequent to their ministrations.


    One guy noted that a certain company was a good short play, because it was an "old world yellow page" company, just out of curiosity I had a look and was quite surprised to discover that the pundit, had missed the fact that the company had a great online and cash producing presence.


    All of which is to say, do your own due diligence, do not rely on others to do it for you. You will be very often surprised by what you find that they do not mention, leave out and/or ignore. But it's the old legal sector trick: "If the facts are with you, pound the facts, if the law is with you, pound the law; if neither the facts or the law are with you, pound the table!"
    4 Dec 2013, 10:54 AM Reply Like
  • ALL new, disruptive stocks that have shown the growth rates DDD and others have, are "overvalued" on fundamentals, during the early stages. History of similar stocks is the proof.
    3 Dec 2013, 01:15 PM Reply Like




    FBR Capital initiates coverage on 3D Systems (NYSE: DDD) with a Outperform and $85 price target, saying high growth and execution will likely trump controversies and expensive valuation.


    "3D Systems is a leading 3D content-to-print solutions provider, including 3D printers, materials, and on-demand parts, as well as software tools, such as scan to CAD and inspection," analyst Ajay Kejriwal comments. "No doubt, the company has had its share of controversies, and valuation is by no means cheap. However, we like 3D Systems' solid and diversified portfolio of patented technologies (SLA, SLS, SLM, MJP, and others), proprietary materials, and software solutions that should not only help address rising customer demand but also drive penetration and the adoption rate of 3D printing as a whole."


    He added, "Despite some concerns regarding potential new competition from lower-priced SLA and SLS printers as some patents expire in 2014, we believe 3D Systems should continue to deliver high growth rates for the next several years as management's initiatives in aggressively expanding applications beyond prototyping into production parts and in the consumer markets start bearing fruit. We also expect management to continue aggressively adding to its printer, material, software, and service portfolio through smart bolt-on acquisitions. We think a burgeoning line-up of new products, many of which are expected to be announced over the next few weeks, and new industry partnerships could potentially provide catalysts for the stock over the near term."


    I hope SA will allow a positive view on things.
    3 Dec 2013, 01:19 PM Reply Like
  • Boy this guy(Tilson) has no clue here. Did he just miss the press release on the new printers?? Go long.....TOUCHDOWN!
    3 Dec 2013, 01:59 PM Reply Like
  • "The talkative hedge fund manager admits he has "sure taken my lumps on the short side recently," but nonetheless calls the current market "the best environment to find great shorts since March 2000 (even better than Oct. 2007).”


    3D printers are printing guns now, we love guns in the USA. You short all you want I'll buy more!
    3 Dec 2013, 02:20 PM Reply Like
  • Tilson has no idea what he is talking about. This is the biggest idea in manufacturing for a lot of years. This concept is huge and will revolutionize industry and how we make things, any thing.
    3 Dec 2013, 02:20 PM Reply Like
  • I wonder what Tilson would have said about the printing press when that was new?
    3 Dec 2013, 02:29 PM Reply Like
  • Yes, please short it. I'll have Christmas bills coming soon.
    3 Dec 2013, 02:30 PM Reply Like
  • Good luck to all you shorts! You'll need it!
    3 Dec 2013, 02:39 PM Reply Like
  • Shorting is very difficult.


    Good analysis + bad timing = huge losses.


    Mr. Tilson (of NFLX fame) proves just how difficult it is year in and year out.
    3 Dec 2013, 02:52 PM Reply Like
  • Please... Don't tell me this guy picked Netflix as a great short?!?
    To go along with his out look on Google? Hahaha...
    My guess is that since he still has a computer and access to electric power, he hasn't been taking his own advice.
    4 Dec 2013, 11:12 AM Reply Like
    4 Dec 2013, 11:29 AM Reply Like
  • Just wonder why SA and WSJ keep posting what this guy would like to short, he seems very accurate in reverse, is that why he is "famous" and get quoted ??
    5 Dec 2013, 02:00 AM Reply Like
  • Ended the day up $1.78 or 1.55%. So much for this short. Not buying at this price, but not selling my 500 shares either. Bought at $12.
    3 Dec 2013, 04:08 PM Reply Like
  • I think Tilson needs a new field to work in. Maybe McDonald's is hiring.
    3 Dec 2013, 04:53 PM Reply Like
  • I started with a degree in physics, then Navy officer then manufacturing for 40 years, mostly military equipment mostly production runs of less than 5000 devices. To make a device you start with drawings, then tooling (think expensive, some very expensive) then parts and hope you did it right. With 3 D printing, for most parts, you go from drawings to parts and can change them easily to arrive at a perfect solution. You can make very complex parts cheaply following only a line on a piece of paper with no tooling. Is that not huge and profitable? Peter Runton
    3 Dec 2013, 05:03 PM Reply Like
  • Over the last six months I have met more and more 'makers' and hobbiests during my client work. They have ranged in age from 26 to 43 and have college degrees. Some work in operations and in IT. I have met probably more individuals that are interested in it and gaining the benefits of using it without actually doing it themselves. To me that really speaks to the individual performer and also the consumer. My wife won't let me buy one yet so I guess I better make friends.
    3 Dec 2013, 08:07 PM Reply Like
  • SA should ask Tilson if he has shorted the stock we deserve to know
    3 Dec 2013, 09:00 PM Reply Like
  • If Tilson has shorted the stock and then got press the SEC should investigate for pushing an article like this one
    3 Dec 2013, 09:00 PM Reply Like
  • I'm pretty sure he doesn't do anything but write for fun and profit, since, one hundred shares of Google purchased at 85 dollars would now be worth over 100k. While shorting the stock would have left one out on the streets, looking for the soup kitchen line.


    Does anyone know if he had anything to say about AAPL? LOL!
    4 Dec 2013, 11:18 AM Reply Like
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