3D printing stocks have been struggling for over a year now, and market leader Stratasys (SSYS, Financial) is no exception to it. The stock was hovering near 52-week lows. On the other hand, Voxeljet’s (VJET, Financial) better-than-expected 2016 revenue guidance gave the entire 3D printing sector a big boost. Stratasys, which was down almost 30% year to date, also jumped on the news.
While many investors may think that Voxeljet’s better-than-expected guidance may be a sign that the stocks in the 3D printing sector have finally bottomed, I think they can offer more downside.Â
Voxeljet was the best run company
Comparing other 3D printing stocks to Voxeljet is not wise as the later has been the best run 3D printing company for a long time. Voxeljet had a strong industrial client base even before it went public. But due to the 3D printing bubble, Voxeljet was priced ridiculously from 2013 to 2015. However, improved revenue guidance shows that Voxeljet may have finally bottomed.
That being said, I think assuming that the likes of Stratasys have also bottomed is a mistake. Unlike Voxeljet, Stratasys was not a well-run company. This is evident by the fact that it has paid over $1 billion in goodwill write-offs. The failed acquisition of MakerBot has cost Stratasys over $1 billion and the company is still being run by the same people. Companies with bad CEOs almost always fail, which is why I think investors should stay away from Stratasys.
Falling sales
Stratasys’ organic revenue and sales dipped over 15% in the last quarter. With the company expected to reveal its Q4 results this month, I expect to see another decline yet again. Moreover, the company has also been bleeding money over the last few quarters. In addition to a bad CEO, failed acquisitions, growing competition, and increasing costs are also long-term headwinds for Stratasys. Due to these reasons, I think the stock has not bottomed and investors would be better off selling it after the recent rally.
Conclusion
There are many examples of companies that have struggled due to a bad CEO. The likes of Yahoo! (YHOO, Financial), Twitter (TWTR, Financial) and GoPro (GPRO, Financial) have all performed terribly due to terrible management, and Stratasys is no exception to this trend. The company is facing many headwinds going forward and I think the stock has more downside to offer. For these reasons, I think investors should sell Stratasys.
