A few years ago, 3D printing stocks were all the rage, but that intensity has since waned in a big way as investors looking for growth opportunities have headed to other industries. As a result, The 3D Printing ETF (CBOE: PRNT) is lower by 19.33% over the past year.
The lack of attention being paid to PRNT and its components these days belies long-term opportunity in the 3D printing space.
“Greater adoption of 3D printing technology will likely usher in major changes over time for certain industries, with implications for companies' profitability and market shares,” said Moody's Investors Service in a recent note. “These developments will likely take many years to come about, however. While corporate investments in commercial and industrial 3D printing are increasing rapidly across many sectors, the technology remains a small part of global manufacturing for now.”
Why It's Important
ARK Investment Management is mostly known for its suite of often high-flying actively managed ETFs, but PRNT is one of several passive, index funds offered by the issuer.
PRNT, which turned three years old last month, tracks the Total 3D-Printing Index. That index employs a multi-factor weighting methodology in a broad-based approach to five 3D sub-industries – hardware, software, printing centers, scanning and printing materials.
“Companies developing and selling 3D printing hardware, services and materials will likely benefit,” said Moody's. “If adoption of 3D printing within commercial manufacturing grows rapidly, it will be credit positive for the industry segment that makes the printers and related software, and offers services to operate the technology. Chemicals and metals companies investing in materials development for 3D printing manufacturing will also be well positioned as the market continues to grow.”
At the end of the second quarter, PRNT held 54 stocks, 80% of which were hardware and software names.
3D printing still represents a scant percentage of global industrial manufacturing, but there are niches where the technology is taking off and could prove disruptive in the years ahead.
“In select industries, the technology will help boost companies' profitability and market shares,” according to Moody's. “Consumer goods manufacturers such as eyewear and footwear are among the industries with the strongest near-term growth prospects for adoption of 3D printing. Other industries that will benefit include aerospace, medical devices, automotive and capital equipment, to varying degrees.”
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