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Obama Tries But Fails To Ignite Apple And 3D Printing

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3D Systems - ZPrinter 850 (Photo credit: Creative Tools)

In last week's State of the Union address, President Obama mentioned Apple and 3D printing.  Apple CEO Tim Cook was given a prominent spot in the first lady’s box.  Obama looked at Cook and said, "This year, Apple will start making Macs in America again.''  Cameras focused on Cook and he smiled.

The morning after the speech there was no impact on Apple stock.  But 3D printing stocks were quite a different story.

Obama said, "A once-shuttered warehouse is now a state-of-the art lab where new workers are mastering the 3D printing that has the potential to revolutionize the way we make almost everything." Four 3D printing stocks were hot on the morning after the speech.  The real hot number was Proto Labs.

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On the day after the speech, Proto Labs traded as high as $52.50, the previous close is $42.  In all fairness, it was not all Obama, Proto Labs reported strong earnings. Proto Labs reported $0.31 per share compared to consensus of $0.26; but revenues rose only slightly above the consensus.  On the day after the speech, 3D Systems traded as high as $66.10 and the previous close was $63.07; Stratasys traded as high as $77.57, the previous close was $75.52; and the recent IPO ExOne traded as high as $30.05, the previous close was $27.50.

3D stocks are over hyped and overpriced.  3D Systems trades at a P/E of 87.  Stratasys trades at a P/E of 81.  ExOne does not have earnings as it is losing money.  The P/E of Proto Labs is 48.

Proto Labs is different from the other 3D stocks mentioned here in that it does not sell 3D printers, but offers 3D printing and custom machining as a service.

In the trading action since the speech, short sellers aggressively stepped in to short 3D stocks as they approached their highs, and have continued to push the pedal.  In the past, short sellers have been quick to book profits, allowing momentum traders to jumped back in and drive prices higher.  It is yet to be seen if this scenario will be repeated.

Right now 3D stocks are a battle ground between sophisticated short sellers and mostly retail investors who fall prey to the hype in the financial media.  Some financial newsletter services have been extensively using 3D printing as bait to attract new subscribers.

There is no doubt that 3D printing has a bright future.  However, more and more competition is coming and these stocks cannot sustain their present valuations once sanity sets in.

As is often the case, Wall Street is going to suck in unsuspecting moms and pops and the professionals are going to make money at the expense of moms and pops in 3D printing.

About Me: I am an engineer and nuclear physicist by background. I founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Write me: Nigam@TheAroraReport.com.  Follow me here. Subscribers to The Arora Report are long Apple from $131 and have already taken partial profits on 90% of the position. 

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