There are two sides to the story of 3D printing stocks.
Shares of industry stalwarts Stratasys and 3D Systems have fallen around 90% from their 2014 highs, struggling to hang onto gains as the coronavirus pandemic put a strain on consumer demand. In the meantime, competitors Proto Labs and Materialise NV have seen their stocks soar, up almost 75% and over 92% in the same time frame.
So, what gives?
Catherine Wood, the CEO and chief investment officer at Ark Invest, which runs an exchange-traded fund partly focused on 3D printing, says the group has seen an important divergence in recent years.
Currently, "it's in the valley of despair," she told CNBC's "ETF Edge" on Monday. "Many stocks are down 80 to 90% from their highs because their focus was on the consumer space and not on the industrial space."
"Crisis creates opportunity, and that it is going to accelerate the demand for 3D printing."
Cathie Wood
Wood's firm presides over the Ark Autonomous Technology & Robotics ETF (ARKQ), formerly known as the Industrial Innovation ETF. Its top holding is Tesla at 11% of the portfolio, followed by Proto Labs at 10%, education software company 2U at 8%, Stratasys at 6.5% and Materialise at 6%. ARKQ is up almost 17% year to date.
But there could be a new near-term catalyst for the space as the pandemic pressures industries like travel, Wood said. Aircraft manufacturer Boeing has said that air travel could take up to three years to recover.
"Boeing and Airbus, their gross margins are in the 15-20% range," Wood said. "Now that the FAA is approving it, 3D printing can cut those costs by up to 90% as well as lower the weight and form factors of the various parts in engines and shrink the number of parts. ... Given the turmoil and trouble it's in right now, [the aerospace industry] is going to seek out even more aggressively some of these new technologies that are going to help it get back to profitability."
In short, "crisis creates opportunity, and that it is going to accelerate the demand for 3D printing," Wood said — and that demand won't just come from aerospace companies.
"There are many medical applications ... that are going to submit to 3D printing because 3D printing allows for such incredible customization," she said.
That could include artificial hips and knees, Wood said, adding that a majority of hearing aids are, in fact, 3D printed.
"Cloud ETFs have brought in over $1 billion year to date."
Jay Jacobs
Head of Research and Strategy, Global X ETFs
Automobile manufacturers could also soon turn to 3D printing in a big way as they run into demand issues, the CEO said.
"They are going to be turning to new technologies that are going to help them lower their costs, lower the fuel consumption in terms of weight and, ultimately, create different form factors," Wood said. "We think that entire autos, ultimately, will be 3D printed."
All this goes to show that not all industries are subject to weakness in the face of the pandemic, Jay Jacobs, head of research and strategy at Global X ETFs, said in the same "ETF Edge" interview.
"Investors are recognizing that disruptive technologies [are] not only not really harmed by what we're seeing during Covid-19, they're actually some of the biggest beneficiaries," he said.
Jacobs cited his firm's Global X Cloud Computing ETF (CLOU) as an example. CLOU has climbed nearly 23% this year.
"It's holding companies that are facilitating video conferencing. It's holding companies that are facilitating governments communicating with their local constituents about emergency response or companies communicating with their customers all through software, through the internet, through these different types of cloud infrastructure, and that is just how the world is working during this stay-at-home environment," Jacobs said.
CLOU's top holdings are Twilio at 6%, Everbridge at 5%, Zoom Video at 5%, Shopify at 5% and Coupa Software at 4%.
"We're seeing a lot of interest in cloud and robotics right now, and cloud in particular. Cloud ETFs have brought in over $1 billion year to date with most of that money coming in just in April," Jacobs said. "So, investors certainly realize that cloud computing has become really the key to the economy right now."
ARKQ ended trading up less than 1% on Friday. CLOU rose nearly 2%.
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