DDD Stock: Why Has Cathie Wood Started Buying 3D Systems?

Cathie Wood, Founder and Chief Investment Officer of ARK Investment Management, has developed a reputation for controversial takes — especially on the world’s leading disruptive tech stocks.

Wood has loaded up on the shares of one 3D printing stock in particular in September, following news that its product portfolio could be getting more bite.

Cathie Wood Buys DDD Stock

In the week commencing September 17, Wood made six separate purchases of 3D Systems [DDD], a 3D printing company.

Source: Cathie’s Ark

In total, Wood bought 420,227 shares for the ARK Autonomous Technology and Robotics ETF [ARKQ] as well as 177,598 for the ARK Space Exploration and Innovation ETF [ARKX]. These accounted for 0.15% and 0.21% of each fund, respectively. 

3D printing may not seem relevant to the space exploration industry at first glance, but as Jeff Desjardins, Editor-in-Chief of Visual Capitalist, told OPTO Sessions in January, 3D printing has some of its furthest-reaching potential applications in the space industry.

“If you can create anything that you need up in space, rather than having to fly it up from here”, he said, the costs of operating are greatly reduced.

For their part, Wood and ARK Invest see 3D printing as a potentially $900bn opportunity. 3D-printed parts could “reduce global emissions and give flight to new aircraft both for earth and outer space”, said ARK’s Chief Futurist Brett Winton in a white paper published in March.

DDD Stock Performance

True to form, Wood appears to be capitalizing on a dip in 3D Systems’ share price. The stock has fallen 61.57% year-to-date and 45.90% over the past 12 months.

The shares gained 9.17% on September 17, however, following news that the US Food and Drug Administration (FDA) had approved its multi-material, monolithic jetted denture solution. 3D Systems will become the first company to offer a solution like this, which will enable dental laboratories to produce and deliver “durable, long-wear and aesthetically beautiful dentures” more efficiently.

The news follows another FDA approval from the previous week for a 3D-printed implement for ankle replacement surgery. 3D Systems is establishing itself as a leader in the 3D-printed medical devices space, with 2 million implants already having been produced.

Comparing 3D Printing Stocks

While 3D Systems has been added to these two ARK funds of late, as of September 24, 2024, it only held the 20th spot on the list of companies in ARK’s index-based 3D Printing ETF [PRNT]. 

The top two US-listed holdings in the fund are Xometry [XMTR] and Autodesk [ADSK]. 

Xometry provides an artificial intelligence-powered 3D printing and prototyping service, primarily for the manufacturing industry. Autodesk provides 3D design and engineering services for the architecture, engineering, construction, product design, manufacturing, media and entertainment industries.

Source: Yahoo Finance

DDD Stock: The Investment Case

The Bull Case for 3D Systems

3D Systems’ stock is significantly underpriced relative to its trailing sales, compared to Xometry and particularly to Autodesk. 

Its two recent FDA approvals could open up new sources of revenue. For example, research from Markets and Markets suggests that the global dental 3D printing market alone could increase at a CAGR of 19% between 2024 and 2029, with 3D Systems identified as a key player within this industry.

The median price target for DDD stock among analysts polled by LSEG, of $3.13, implies gains of 28.3% over the next 12 months. The high target of $4.00 implies 63.9% gains.

The Bear Case for 3D Systems

However, 3D Systems faces significant challenges. The macro environment has been challenging for businesses in its industry for some time, and while the Federal Reserve’s recent rates cut could lead to increased corporate capital spend — which could increase demand for 3D printing services — the economic weakness that goes hand in hand with these cuts could also prove a headwind. 

Analysts polled by FactSet do not expect 3D Systems to post a full-year profit either in 2024 or 2025. Annual earnings have remained downbeat since 3D Systems posted earnings of $0.45 per share in 2021, and losses are expected to increase in 2024. 

Conclusion

Cathie Wood clearly has conviction in 3D Systems, but she may well be playing a long-term game. Investors should conduct their own thorough research and familiarize themselves with the risks involved before making any investment decision.