Not so long ago, harried moms and dads would brave the holiday season crowds at the mall to buy those Lego accessories or that Star Wars battle cruiser.
Now, with increasingly cheap and easy-to-use three-dimensional (3D) printers, they can turn out such gifts in the comfort of the family living room or garage.
3D printers — which use a process called additive manufacturing to make objects from a digital model by laying down layers of material — are not new. They’ve been used to make manufacturing and engineering prototypes for more than 25 years. However, printer makers are now turning their attention to the consumer market, and have been rewarded with soaring sales and stock prices — as well as the prospect of lucrative buyouts.
Some printers capable of churning out simple items such as keychains, wine bottle holders and missing board game pieces are already selling for as little as US$350. That’s cheaper than a high-end version of Microsoft’s Xbox 360 with Kinect.
“The consumer segment in the next few years will potentially devour everything else that we do,” said Abe Reichental, chief executive of 3D Systems Corp, the biggest listed US 3D printer maker.
Shares of Rock Hill, South Carolina-based 3D Systems, now trading around US$38, have more than doubled since it launched its first printer for home use, the Cube 3D, in January.
Demand is three times more than expected, Reichental said, although he declined to give exact numbers.
Shares of Stratasys Inc, the other major listed 3D printer maker, have more than doubled since the start of the year, to around US$65 as investors sense the next big thing. Privately held MakerBot, which released its first plug-and-play 3D printer, the Replicator, for US$1,749 at the start of the year, faces a problem of too much demand, CEO Bre Pettis said.
“We expected our orders to double from our previous machine, Thing-A-Matic, and instead orders quadrupled,” Pettis said.
Brooklyn, New York-based MakerBot, founded in 2009, has shipped 13,000 printers so far.
About 80,000 3D printers of all sizes have been sold in the US since 2007, research firm Wohlers Associates Inc says.
“If someone develops a very inexpensive and safe 3D printer for children, then I could envision maybe more than half of homes having 3D printers in them, as a toy,” Wohlers president Terry Wohlers said.
Part of the reason for the elevated share prices is speculation that traditional printer makers such as Hewlett-Packard Co and Lexmark International Inc may see 3D as the way forward and seek to buy out a listed 3D printer maker, Paul Meeks of Saturna Capital said.
“Somebody may come in over the top to boost the prospects of their own printing groups,” said Meeks, whose firm holds a small stake in 3D Systems.
Michael Puryear, managing director at Howard Capital Management, said fundamentals are very strong.
“And in this economic environment, a small company that’s growing top and bottom line somewhere between 50 and 60 percent should be rewarded a premium,” said Puryear, whose firm holds stakes of about 1.5 percent in both 3D Systems and Stratasys.
But how much investor enthusiasm is too much? The rapid growth in the share prices worries some analysts.
With a market value of about US$2.1 billion, 3D Systems stock trades at 30.2 times its 12-month forward earnings while Stratasys, with a market value of US$1.4 billion trades at 42.6 times.