Seeking Alpha

3D Systems -3% AH after announcing 5.95M-share stock offering

  • 3D Systems' (DDD) stock offering stands to increase the company's share count by 5.8%. At current levels, it would yield gross proceeds of $327M.  Underwriters have an 892.5K-share overallotment option.
  • The M&A-hungry company names "future acquisitions" as one of its planned uses for the proceeds.
  • 3D carried out a 7.5M-share stock offering (6.2M new shares) last year. The company ended Q1 with $306.7M in cash, and $18.9M in debt.
Comments (10)
  • Andreas Hopf
    , contributor
    Comments (10169) | Send Message
     
    A whopping 5.8% dilution - shareholder homeopathy.
    27 May 2014, 04:47 PM Reply Like
  • RipCrackle
    , contributor
    Comments (120) | Send Message
     
    I love your spin on news that a company, that has virtually zero debt, is raising cash to finance growth. I'll think of you as Dr. Hopf from now on.
    27 May 2014, 09:40 PM Reply Like
  • leviek
    , contributor
    Comments (2239) | Send Message
     
    This is great because DDD needs a war chest to offset the huge $ that HPQ will be throwing into the 3D printing market.

     

    Best acquisition target, in my opinion is Exone (XONE) because of their leading position in metal printing. Having the leading consumer market and the leading metal market will be a solid competitor to HPQ and SSYS.

     

    In ten years the market will likely be controlled by DDD, SSYS, and HPQ. They will likely merge and buy everything in sight, maybe even ADSK. I feel confident in my holdings right now in DDD, ADSK, XONE, and ONVO. Of course, I bought DDD and ONVO at 10 -20 % of their current value, with ADSK (paid $32) and XONE, currently in a loss. At the market lows late this year I may tiptoe into SSYS. I want to eventually have 15%, maybe slightly higher, of my portfolio in the 3D printing area, a major portion of the technology portion of my account with maybe another 15%, or so, in the robotic field, including medical robotics. That would be 30% in the two future blockbuster emerging growth areas of the next decade.
    27 May 2014, 05:14 PM Reply Like
  • Energysystems
    , contributor
    Comments (1311) | Send Message
     
    DDD and SSYS will only be around in 10 years if they're acquired, they won't do it alone. They are swimming in a bath tub with 800lb Gorillas. I don't own any of the 3D printing co's yet, since they are still vastly overpriced. Great growth potential, but they've fallen precipitously for a reason. In my opinion, the best way to play the 3D space, is with the large "old tech" names that are easily capable of carving out market space in the 3D printing niche.

     

    fwiw, bad timing on DDD's stock offering. Should have been doing this 6 months ago when the sector was red hot, as opposed to when it's been selling off for months.
    27 May 2014, 05:49 PM Reply Like
  • Tri Duong
    , contributor
    Comments (1503) | Send Message
     
    As far as 3D printing goes, DDD and SSYS are the giant 800 lb gorillas.
    27 May 2014, 06:02 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (10169) | Send Message
     
    3D Systems said it plans to use proceeds “to finance future acquisitions and for working capital and general corporate purposes.”

     

    Meaning, management is planning to buy some more decks to stack their house of cards even higher. Frightening. It seems as if CEO Avi Reichenthal believes that pure momentum will eventually save the business, it's inertia somehow keeping it going over the chasms ahead.

     

    In some way, this company reminds me of a biologic phenomenon, known as the "blossom of fear", whereby a plant, its core roots or stem already beginning to rot, prepares for its final decline by once more sprouting new leaves and blossoms, before the capillary sap transport collapses.
    27 May 2014, 06:02 PM Reply Like
  • Energysystems
    , contributor
    Comments (1311) | Send Message
     
    It's a small niche market with real 800lb gorillas looking to get in. They won't survive if any of the big old tech get in the game, there only way to survive is to get acquired. Which is likely.
    28 May 2014, 06:39 AM Reply Like
  • vanebfbc
    , contributor
    Comments (108) | Send Message
     
    While a good financing strategy, I agree with Energysystems. It's quite annoying how they have been betting on investors' money and patience with badly timed moves. (Stock split the same day as earning report last year, for instance.) It's a good name for swing trading but not long term investment. Not just yet.
    27 May 2014, 06:52 PM Reply Like
  • Bigfloridafish
    , contributor
    Comments (96) | Send Message
     
    There is going to be a lot of consolidation in this field in the future as 3d printing is rapidly expanding in manufacturing. Quality will be king and I have been acquiring shares of SGLB cause they bring quality to 3D printing. Small company with good patents and a good product in PrintRite3D. This company is no doubt going to get gobbled up in this forth coming 3D war. It's so cheap that you would have to be crazy not to just put some shares in your back pocket and let it ride. Take a look at: http://seekingalpha.co... And a lot has happened since this article was written.
    27 May 2014, 07:32 PM Reply Like
  • mfradin42
    , contributor
    Comments (8) | Send Message
     
    I think that 3D Systems could have raised the required capital another way. Diluting stock by issuing a secondary offering has always met with resistance by Wall Street. Furthermore this move is ill timed by the Board of Directors of 3D Systems. After falling over 50% from its" high of 97, the company has finally begun to consolidate and the stock price has moved up. Now, this move by Avi Roethenthal, CEO, will definitely tax the patience of 3D investors. Does he think that the ravenous shortsellers will sit idly by. This is ammunition for them in a massive way! A bad move! He should have left matters alone.
    28 May 2014, 12:08 AM Reply Like
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