Democratizing Creativity - 3D Printing With 3D Systems Corp

| About: 3D Systems (DDD)
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The next generation technological breakthrough is already here. 3D printing will change the way the world views creativity and designing products. The goal of Abe Reichental, the CEO of 3D Systems Corp (DDD), is to "Democratize Creativity." He believes that every person is capable of producing a great idea or design and he wants to provide people with the opportunity to do so. With the recent release of the Cube, 3D Systems has brought this notion of allowing everyone to be creative to life.

How it Works

You may have heard about 3D Systems' newest addition to its line of printers, The Cube. It was released this past March and has been a big hit so far. It is priced at $1,299 which is a bit pricey for the average consumer. Of course as with all technology, one can expect that price to be cut in half within the coming years as manufacturing and efficiency improve. The printer houses color cartridges that are priced at $50/cartridge, with discounts when you buy more than one. A cartridge will last you 13 mid-sized designs. Each design is created out of plastic material and the printer takes about 70 minutes to complete each design. This printer, in essence, allows designers to produce a scaled down version of their product, giving them the ability to look at and feel their products before wasting a ton of money on full sized models.

Where it will be used

As of right now the Cube is mainly intended for hobbyists and small business owners. In the future I would expect that the majority of households have a 3D printer as their main printer. Think back to when cell phones first came around. No one thought they needed one, however once everyone started using them they realized they couldn't live without them. I feel as if the same will happen with these printers. DDD has already tried to "democratize creativity" by creating a store similar to Apple's App store. The store is called Cubify, and allows users to upload their designs and sell their inventions to users with the 3D printers. You will need a CAD program to make a design, but you can buy the software cheap online. So for instance if you needed a model for a couch, you could log onto Cubify, purchase a design, and print it using your 3D printer which would allow you to see what the final product may look like. If you have an iPhone and you need a case, you can log into Cubify, pick a case design that you like, and print it (assuming you have a 3D printer). In this instance you could actually use that case for your iPhone. Another interesting fact is that people are now getting even more creative and instead of using plastic to print with, they are printing with edible materials such as chocolate!

DDD's Outlook

Chart for3D Systems Corp.

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If you were to search for DDD articles over the past year you will find articles where the authors advise their readers to sell at $15 or $20 or $30. They don't think DDD has the capability to hit it big. Then of course everyone thought the same about Apple (AAPL) and boy I wish I wouldn't have listened. DDD's revenues increased 41% from 2009 to 2010 and 44% from 2010 to 2011. It is estimated that revenues will hit $347.62M by the end of 2012 (a 34% increase) and revenues in 2013 will be $415.55M according to Yahoo. Earnings are growing at a steady pace as DDD had earnings of $0.77 in 2011 and is expecting earnings of $1.14 in 2012 and $1.33 in 2013. DDD is outperforming both its industry and sector. A P/E ratio of 44.66 may seem high but you have to take into account that DDD is a growing company, and growth stocks usually have higher P/E ratios than value stocks. YTD it has returned 125.56% and I don't think it is done yet. DDD's next earnings date is July 26th. The key of this release will be how well has the Cube done it terms of sales. How much revenue has it brought in and do they expect continued growth in terms of market share and adopters? In the upcoming year investors will want to watch the company closely, keeping an eye out for any new product developments or even institutions buying in to 3D printing. An article released today describes how DDD just successfully integrated its new ProJet MP 3500 3D dental printer with 3Shape's Dental System. This combined technology offers a cost effective and efficient way for dentists to create models for their patients and is a small win for DDD.

A long road ahead

While I do believe this technology has the capability to succeed, I'm not so sure how soon we can expect it to do so. To suggest that the technology will be used by average consumers in just a few years would be premature. I think that a long trend of advancements and upgrades will lead to a slow adoption of the technology. A need for the average person to have 3D printing has not yet been identified. As the technology improves and is able to make larger items/models, you may see a more rapid pace of adoption of the technology.

Summing it all up

As I have stated I do think this technology could be the next breakthrough. If 3D printing does take off, DDD will be in prime position to capture that market share. However as with every company offering new technology to the public, there is a high chance that they will fail. The odds are stacked against them, especially considering the slow market we are experiencing right now. What are your opinions? Do you think DDD will succeed or fail?

Disclosure: I am long DDD.