A month ago, hedge fund manager Whitney Tilson sent out a note saying that he thought the rise of 3-D Systems’ stock “would end very badly.” Tilson, who runs Kase Capital, is short the 3-D printer-maker’s stock.
Today, 3-D Systems’ stock is cratering after the company said it was increasing spending, which will impact earnings.
Tilson has a new note out today, which includes the above chart, saying that it’s the “beginning of the end for the 3D printing bubble.” He also referred to the 3-D printing sector as a “STUUUUUUUUUPID bubble.”
Even with today’s decline, Tilson said he’s not going to cover shares. He said a month ago that he had a price target of $US10 a share. He said that he added more to his short position.
Tilson also included a chart of 3-D Systems topping out after it hired will.i.am. as its Chief Creative Officer at the Consumer Electronics Show (CES) in Vegas.
Here’s Tilson’s full note:
This could well be the beginning of the end for the 3D printing bubble (I’m short five stocks across the sector, the largest of which is DDD).
I’m not the slightest bit inclined to cover anything today and, in fact, just shorted a bit more DDD as it bounced above $US62 on the entirely predictable rush by analysts to reiterate their buy ratings — “move along, nothing to see here”. What, you think they’re going to admit they’re wrong? And risk losing the banking business of a highly acquisitive company? HA!
3D printing is real, but the stock valuations aren’t. For example, coming into today, DDD was trading at 17xrevenues. So now it’s trading at 14x. So what? Even if DDD is accounting properly for its nearly three dozen acquisitions in the past three years — which I highly doubt — it’s maybe worth 3x.
The story is the same for pretty much every company in the sector, which is in a completely obvious and STUUUUUUUUUPID bubble.
PS — Was it really only last month that we were subjected to this foolishness at CES? 3D Systems Appoints will.i.am as Its Chief Creative Officer. Here’s a video of will.i.am with DDD CEO Ari Reichental: www.youtube.com/watch?feature=player_detailpage&v=DOVbJ_NOeXM#t=299 — high comedy! And you gotta love this stock chart of DDD over the past year: