It’s a good conference…recommend anyone that’s interested in 3-D printing to attend. Should be cheap enough to attend and walk the floor with a networking pass, which I think is like $20.
Hope nobody on this thread still owns DDD. 1Q14 miss on gross margin and EPS, management sounding less sure of themselves, sell-side starting to ask the tough questions, DDD stock now at $43.52 (-$5.71, -11.6%)? Errrr…no thanks.
I think DDD shares should be worth less than the cost of a networking pass to next year’s Inside 3-D Printing Conference - as you can see from my post above, that’s $20.
I picked some up this morning. I’ve been waiting for something like this. Anyone that thinks this earnings reports contains any surprises hasn’t been paying much attention. They missed EPS by a penny…no big deal. Revenue exceeded and mgmt reiterated their full year forecast.
The BS about margin compression and “less confident” mgmt is coming from the shorts. Mgmt announced margins would be under pressure for the foreseeable future as they invest in R&D and Sales and Marketing. That’s good as far as I’m concerned. As far as “less confident” management, that was because they said most of their earnings are going to come from the second half of the year due to fulfillment delays. Not optimal, but a short term problem.
I’ve done alright in this sector so far, and I’ve been keeping some powder dry to reload. I’m probably early what with SSYS still yet to release earnings, but this seems like a good entry point for the medium term. Bought DDD, SSYS, and XONE again this morning.
Actually, I’ve been paying attention, so much so that I have been short DDD since $90 and had been long all the way up from $45 as of August 2013, and have been right on both directions. How many people can say that? I have talked my book in every post on this thread, so people know I’m not fudging the numbers.
Investors don’t care about revenues unless they’re a big-time beat, which they aren’t. In fact, the company has made revenue estimates for each quarter in recent memory, so obviously that’s not the pain point investors have. For 1Q14, DDD posted $147.8mm revs vs. consensus $146.5mm. That’s not a “beat.” And did you see what happened when they pre-announced 4Q13 and 2014 guidance in February? Their revenues were in-line but EPS was like 50% below Street expectation. DDD shares gapped down 30% and got a lucky bounce in the next two weeks due to a short squeeze before selling off after the 4Q13 print. This story ain’t about revenues no more, and that’s what the bulls are missing.
This quarter (1Q14), DDD blew it on GM, almost all of came from a shortfall driven by hardware, and we haven’t even talked about the imminent pricing collapse in consumables yet. By reiterating FY guidance they’re just setting a higher hurdle for themselves. And do you know what kind of competition is on the fray? Most people don’t, but they should.
I’m afraid I can’t provide anymore color since the short is getting pretty crowded already. I’ve already pointed any potential bulls here in the direction of what they should be looking at. I respect your view on the importance of revenue numbers, but I think that the revenue growth story has already run its course in 2012 and 2013 and investors are now looking for something different, and that’s earnings and cash flow generation. The way the stock has gotten bashed coming out of the last two quarters is pretty telling of what investors are keying in on.
I hope everyone on AnalystForum makes tons of money…but all I can say is caveat emptor…DDD goin’ lower from here.
Um…well, I can say all that too. We’ve both talked our books in this thread, and while I didn’t short (just not really my thing) I timed it nearly identically to you (though you revealed your long position long after the run-up). I know you know the sector better than most and we’ve traded DDD almost in lockstep. Now, however, our paths part. There are still some strong headwinds for my long position to work out, but they’re all fairly near-term. Like I mentioned, SSYS needs to not screw the pooch with their earnings, and the weak hands (read: mindless momo investors) need to be shaken out. I’m reasonably confident SSYS won’t disappoint and 3D printing has fallen from momo grace so, it’s my belief, that the tides are going to turn.
Still have a lot of shorts to contend with, but that’ll just make it nicer when they get squeezed. I very well may be a quarter or two early, but with as fast as these stocks move I’d rather dive in now than get greedy waiting for a better entry point. That said, I’ll be watching closely and bail if things don’t turn around in the next few weeks.
Protip/lifehack (serious): Never start a sentence with the word “actually” unless you want to sound like an asshat. You’ll either come across as defensive, snobish, pretentious, or just generally like a jerk. It’s never appropriate.
Hey bud, I realize I’m not exactly doing “charity work” in this thread, but I honestly believe that bulls are going to lose their shirts if they hang around in DDD for a while and I’m thinking about doing any DDD shareholders here a favor. If I’m wrong in my short and the stock goes back up to $60, then I’ll be the one with egg on my face. That’s fine, but I’d rather take a stand and be proven wrong than to not have an opinion at all.
Also, I look at starting a sentence with “actually’ as analogous to anyone insinuating that I haven’t been paying attention. I guess others here can decide which is more or less appropriate.
At any rate, thanks for the “protip” – I’m not trying to be disrespectful. I assure you that I’m not as obnoxious as you think, and am sure if we met up we could enjoy a few beers and talk some good investment ideas. In this case, we have divergent views as you noted, and I could be wrong, but my analysis tells me DDD has further to fall.
That’s the whole point of the Investments forum. I don’t care that you’re on the other side, it’s not personal. One of us will take some lumps from the other over the course of the year and maybe we’ll learn something along the way.
Why so defensive? In point of fact, I wasn’t even thinking about you when I made the comment about paying attention. That was directed at a couple SA authors (that, now that I think about it, sound just like you) that are dumping on the stock to serve their own purposes instead of looking at the bigger, longer-term picture.
I have never written an article for SA but don’t have a problem when people do. Some of the content is just sensational bunk, while other articles are quite good. It should be up to the reader to be able to discern fact from fiction. I think when one takes on a position in DDD (either long or short), one needs to be OK with the idea of taking on headline risk and noise.
this is good reading
geez. this is Ackman v. Icahn all over again.
Less than 24 hours later, it’s clear I’ve won this debate. My annualized returns (based off one day of trading) are approximately 1,320%.
I declare victory over Numi.
Haha, touché…
Haha, touché…
SSYS released this morning. Their report looked almost identical to DDD’s. Slight revenue beat, EPS in-line, and guidance in-line. Stock tumbles just like DDD and is already bouncing back just like DDD did an hour after open.
Still ahead on these trades so my victory remains intact. It did kind of surprise me how the market reacted this morning though.
I agree, the SSYS report was basically identical to DDD’s. 1Q revs/EPS were a lay-up, and most people know (or should know) SSYS and DDD can massage these numbers. So, IMO $6mm rev beat is not a big deal because what they can’t hide is the lack of OM expansion (or regression in the case of the most recent qtr).
The problem with SSYS is that they, like DDD, guided to consistent OM’s and back-end loaded the year. When stock trades at 22x EV/EBITDA and 6x EV/revs and operating margins aren’t going up and to the right, stock deserves to get whacked. Co’s don’t get paid to maintain guidance in a choppy tape, which is why SSYS was down -9% early, but probably some people buying on the cheap / covering short since then.
I could be wrong, but still think there’s a lot more downside than upside in SSYS. The short also seems like a good risk-adjusted bet given how basically most people [mis]perceive SSYS as being a better quality biz than DDD (SSYS has their own share of problems). The long SSYS/short DDD HF trade is pretty crowded too so short squeeze not a huge concern.
Last of the 3D printers, XONE, reports after the close. Given the type of machines they build - huge industrial printers - their revenue and earnings are always going to be lumpy. What I’d like to see is a huge order book and slightly higher EPS guidance. That happens and I think we’re (I’m) in good shape.
If they disappoint, which - honestly - is the more likely scenario*, I pull the chute and park everything in TRTC until retail MJ comes online in Washington. Then come back to the space after the dust settles.
*Even with a decent report the street is likely to take it lower. People are looking for a home run quarter and that’s just not likely to happen.
VJET reports after the close on Thursday, but things don’t look so good for XONE unfortunately.
Have you covered yet Numi?
Covered DDD short after the SSYS print at ~$48. I think the whole 3DP sector could go even higher because cost of borrow on everything but SSYS has gone parabolic in a strong tape. Smarter thing would probably have been to cover AND go long DDD instead of staying on the sidelines, as soon as I noticed as soon as I noticed the increase in recalls. Looking at neg 50’s on DDD as there is basically no borrow now, but I don’t have the guts to go long DDD now because of valuation as I already missed the rally from $48 to $56.
Anyway, there are other better quality tech names trading at less demanding valuations out there that I’m excited about owning, as opposed to just trading beta or short squeeze.
Yes, yes…but can we just get to the part where you tell me how awesome I am?