It took about three nanoseconds for the market to fall in love with Camtek LTD (NASDAQ:CAMT) a couple of days ago after it announced it would soon be introducing a 3D printer that could print circuit boards; the mere mention of the term "3d printers" is enough to incite bullish hysteria. And, it only took another three nanoseconds for the market to begin comparing CAMT to VJET... the ticker symbol for the equally-obscure (until recently anyway) 3D printer company called Voxeljet AG (NYSE:VJET). Indeed, Camtek LTD was posed as "the next Voxeljet AG", which is nothing less than amazing because nobody is all that clear yet on what the real Voxeljet is. But, just for the record, enthusiasts and shareholders better hope CAMT isn't following in the footsteps of VJET, as the rug got pulled out from underneath Voxeljet AG a few days ago, shocking anyone and everyone who drank the Kool-Aid.
I'll say what needs to be said about VJET and CAMT, even if everyone else is afraid to. Heck, I'll say it because everyone else is afraid to. Here goes. There's far more hype and story and buzz than actual substance and opportunity with Voxeljet AG, and more recently, than with Camtek LTD. Investors who are buying into the hype and disregarding the financial metrics are setting themselves up for disappointment. [Note that you can go ahead and post your colorful disagreements and name-calling below.]
That's not to say what VJET and CAMT have planned in the way of 3D printing capabilities isn't cool. Indeed, it's ultra-cool. As was noted above, Camtek is developing a printer that can print circuit boards, while Voxeljet is more of a generalist that is just as interested in marketing its 3D printing service as it is in selling its printers; performing outsourced printing services can save its customers money, by skipping the need to acquire a printer of their own. But, the metrics and/or the shtick just don't seem to add up... in a philosophical sense or in a financial sense.
Take the estimated market size Camtek has hypothesized for its circuit-board printers. The company expects the niche industry to be worth $600 to $700 million, which isn't a stretch considering circuit boards are a multi-billion business. But, there may be a reason nobody else is making these printers yet... it may be a huge leap (psychologically as well logistically) for the board-makers to switch gears and adopt a relatively unknown process to make circuit boards. The market sure didn't mind assuming the absolute best for CAMT though, bidding the stock up more than 200% in just the past three days, certain the same company that only drove $22 million in sales last quarter would be able to capture the bulk of that $600-$700 million opportunity, and soon. That's a big leap of faith too, and with a newly-frothy market cap of $163 million, there's little to no room for missteps.... especially considering Camtek LTD doesn't have an actual printer on the market yet to prove demand. It's only got prototypes.
Camtek CEO Roy Porat's painted a compelling picture regarding the company's circuit board printing prospects, saying (but read this slowly with a scrutinizing, turning your BS detector on) "I will think it will have a big impact on the revenue line in the near future, no doubt in my mind again as I've said I think, the risk element big part of the risk element is behind us in terms of the technology, and we're few weeks from putting tooling to a customer. And I think the next milestone is really meeting this milestone which will be few weeks from now. So by next quarter call, I hope I'll have more interesting update. And I think we'll take it once step at a time and I don't think I want to go into details right now of expected revenues in 2014, a little bit too early for us to estimate. And we have to remember, although 3D printing is it's a technology out there already, but 3D printing for our application, which is a functional 3D printing, has not been done yet in the world. So as far as I know we're the first one."
Uhhh.... huh? Never even mind the lack of real clarity, and think about this: Sometimes being the first to the market is a great thing. Other times though, there's a reason nobody else is doing what you aim to do.
As for Voxeljet AG, yes, it was all the rage beginning in mid-October when the stock went public; traders were already innately aware of the company's intent to expand its production capacity to provide 3D printing services, as well as sell 3D printers. That's why VJET rallied from a launch price $20.00 on October 18th to a peak of $70.00 exactly one month later. Problem: The market cap exceeded $600 million by that point, which is just more than this company can justify compared the maximum revenue opportunity it'll be facing anytime soon. For perspective, Voxeljet generated $13 million in sales over the past twelve months.
As of November 19th though, VJET illustrated the risk of buying into 3D printing mania based on concept, coolness, and premise rather than buying these stocks based on plausible opportunity. In just three days, this stock plunged from that peak of $70.00 to a low of $32.26. The prompt? The mere mention of the stock at a well-known short-selling, fraud-exposing site.
Whether the "foul" cry is right or not, for any stock that vulnerable to one nay-sayer, it was only a matter of time before something rubbed the market the wrong way and torpedoed Voxeljet AG. And, in retrospect, we can look back at all the media and "news" coverage (using the term loosely) and see that the decidedly, overwhelmingly bullish euphoria surround VJET was oddly unanimous - and loud - feeling almost like the euphoria that bids a biotech stock up in front of a key FDA approval, only to implode once the news becomes official, hence the term "buy the rumor, sell the news."
As for whether or not Camtek LTD is the next Voxeljet, sadly, yes, it probably is... and CAMT shares are apt to suffer the same fate VJET shares did.
While these two companies, and most other 3D printer companies for that matter, have made some pretty amazing products and changed the world by doing so, the industry's stocks are sill capable of creating a buying frenzy that just isn't merited. Camtek's CEO's compelling but completely ambiguous outlook that traders seemed to love hearing anyway makes the point. The whole thing is reminiscent of (1) the 2008-2009 boom-bust of Chinese stocks, (2) the coming and going of genome-mapping mania, and (3) about a thousand other themes that did miraculous works for related stocks for a while, but lost their muscle rather quick. The reality is, 3D printer mania is winding down. It's just that a few folks don't want to believe it yet. They're the ones driving these short-term surges. Even those will be going away soon enough, leaving us with a group of stocks that have to climb on their own merits as investors start to apply a "show me first" standard.
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