|General Electric’s Plan for 3D Printing with Metals|
When we first heard about 3D printing, it was a rumor floating around in the recesses of Hewlett-Packard’s ( NYSE:HPE) printer development teams. Someone had heard that HPE was actually printing chess pieces, something that sounded right out of Star Trek. Then when desktop 3D printing started gaining in popularity, people found that printing chess pieces just wasn’t that interesting after you had done it a few times. The ability to print any shape in plastic in small batches just isn’t that compelling. Sure, Adidas is now starting to use 3D printing to build customized shoes, but we’re just not seeing the sort of adoption that drives shareholder returns.
Look no further than the two 3D printing darlings that fell from grace. If you bought shares in Stratasys ( NASDAQ:SSYS) and 3D Systems ( NYSE:DDD) 4 years ago when we first started writing about 3D printing, you would have lost -82% and -86% respectively. If we look at the YTD returns for both of these stocks, SSYS appears to be showing some life with a +26% return while DDD has sunk -35%. The positive return from SSYS isn’t great considering that an investment in a NASDAQ ETF would have returned +25% without all that risk. So where’s all the opportunity?
The application of 3D printing in metals may be where all the opportunity is at. One company entering this space lately is General Electric ( NYSE:GE). You may recall that GE made a $1.4 billion investment in Concept Laser and Arcam ( STO:ARCM). That is in addition to the $1.5 billion they have spent on additive technologies over the past decade across all six GE businesses resulting in 346 patents in material science. This was highlighted in today’s investor update presentation by GEabout how they plan to reinvent themselves.
In case you haven’t been following what’s going on at General Electric, they’ve largely been pissing off their shareholders as evident by the -39% YTD drop in share price compared to a return of around +18%over the same time frame for the Dow Jones Industrial Average. While they’ve show promise as a company that wants to build the “ Internet of Everything” with their recently established GE Digital division, they’ve shown poor performance in their core businesses, mainly power. In response to general dissatisfaction by their shareholders, GE held an “ investor update” today in which the focal point was a 50% cut in their dividend. What also stood out in the presentation were mentions of 3D printing (what they refer to as additive) peppered throughout the slide deck, and featured as one of their 4 primary talking points for the entire presentation (Aviation and Additive). Here’s a look at their slide which talks about the plan to focus on additive as a key component of their turnaround strategy.
$1 billion in revenues by 2020 isn’t going to move the needle much for a company that saw $123 billion in 2016 revenues, but the fact that they are more bullish now than ever on 3D printing, and plan to have an installed base of ~3,000 machines in just two years’ time, bodes well for anyone out there working on 3D printing with metals. Now that they’ve cut the dividend, there’s some free cash flow that could be used for making some acquisitions. It’s not like there are a ton of players in the space. While we’d love for them to pick up ExOne ( NASDAQ:XONE) so we can finally close out our position, there are other players out there doing some pretty remarkable things when it comes to 3D printing with metals.
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