Beginner’s guide to investing in 3D printing
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3D printing has taken off as a futuristic technology that goes beyond just the printing industry. 3D printing is the printing of images, tools, shapes – and houses even – in three dimensional form, whether it is something as simple as a keychain or as useful as a brick to build an entire building.
The 3D printing industry has experienced exponential growth over the last 30 years, and its continued contributions to technological innovations across major industries position it for ongoing growth and considerable investment potential.
Below is an overview of the 3D printing industry and what potential investors need to know.
What is 3D printing?
The idea of 3D printing a bridge – which actually happened in the Netherlands in 2017 and then again in 2021 – might seem like something out of a futuristic sci-fi movie, but the technology has in fact been around since the early ‘80s. Hideo Kodama filed for the first 3D printing patent in 1980, describing the technology as a photopolymer rapid prototyping system using UV light to harden the material.
Since then, the idea has taken off, with 3D printing being used to design intricate small objects to being touted as the future to the manufacturing industry. In its early mass market days, some companies attempted to bring 3D printers into the home. While this proved difficult, 3D printing experienced rapid growth in the 2010s and sales ballooned to $9.3 billion in 2018. In 2021, the industry grew to $10.6 billion, with projections to reach $50.8 billion by 2030, according to 3D printing analysis and market research firm SmarTech Analysis.
3D printing key stats:
- 3D printing technology has been around since the early ‘80s.
- In 2005, Dr. Adrian Bowyer created the self-replicating 3D printer process, allowing for the creation of next-generation 3D printers. Self-replicating printers can make copies of its own parts, effectively cutting down production costs and supply chain blockages.
- The industry is expected to reach over $50 billion in sales by 2030, according to SmarTech Analysis.
- Throughout the world, 2.2 million 3D printers were shipped in 2021 and the shipments are expected to reach 21.5 million units by 2030, according to Grand View Research.
- Global 3D printing sales are forecasted to expand at a compound annual growth rate of 20.8 percent from 2022 to 2030, according to Grand View Research.
- A 12-meter 3D-printed steel bridge was opened in 2021 in Amsterdam, opening the road for the technology in everyday life.
A brief history of 3D printing
3D printing has rapidly evolved since its inception some 40 years ago. Below is a brief overview of its trajectory from hobby to billion dollar industry.
The first stereolithography apparatus (SLA), or resin printing machine, was created by Charles Hull in 1983. Hull was granted the first patent for a 3D printing machine in 1986 and later co-founded 3D Systems Corporation. The company would go on to sell the first 3D printing SLA machine in 1988 called SLA-1.
The 1990s saw a number of 3D printing technology achievements setting the stage for global use. In 1997, AeroMat produced the first 3D process that allowed for high-powered lasers to fuse powdered titanium alloys, opening the door for the use of 3D manufacturing.
A pivotal moment in the evolution of the manufacturing of 3D printing, Dr. Adrian Bowyer created the self-replicating 3D printer process in 2005, allowing printers to replicate their own parts and helping expand next-generation 3D printers.
3D printing was largely marketed in its early stages for home use, and as a way to supplement or replace at-home printers. London-based 3D printing manufacturing group AMFG says that early visions of 3D home printers were not easily applied for home use. The critical consumer application that would have allowed home 3D printing to take off never truly materialized, and as a result the market lagged for a number of years.
In the meantime, industrial 3D printing took off and supported a resurgence of the 3D printing market, taking it to new heights for both investors and manufacturers alike.
2009 was a transformative year for the 3D printing business. Micro, a consumer 3D printing company, launched a funding campaign on Kickstarter, becoming the largest-funded 3D printer campaign on the platform. The same year, 3D printing company Makerbot launched do-it-yourself kits to allow consumers to 3D print at home. The company also issued a file library where people could upload their own files and 3D design patterns, becoming the largest online library for 3D printing designs in the world. Stratasys acquired the company for $400 million in 2013.
In a 2015 report, Harvard Business Review stated that numerous big name companies were using 3D printing to aid in production. Among them were General Electric, Lockheed Martin, Boeing, Aurora Flight Sciences, Invisalign and Google. Harvard added that in 2014, sales of industrial 3D printers in the U.S. already accounted for over 30 percent of industrial automation and robotic sales.
3D printing has become an embedded part of industrial technology. The ability to intricately design products that traditional manufacturing cannot, and the revolution of creating such products with materials light enough to be used in 3D technology has spearheaded innovations in manufacturing and supply chain distribution. A recent report by Stratasys explained that part of 3D printing’s expansion is due to the technology’s flexibility. It is reconfigurable, adaptable and “above all else digital,” making it an easy alternative where needed.
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Top 3D printing companies
|Company||Stock symbol||Market Capitalization||What it does|
|Desktop Metal||DM||$780.7 million||Creates processes for metal 3D printers.|
|Xometry||XMTR||$1.8 billion||Provides on-demand manufacturing services for 3D printing.|
|Markforged||MKFG||$382.4 million||Software interface that allows you to create and print 3D parts. Provides physical printers as well.|
|PTC Inc.||PTC||$13.1 billion||Provides an entire 3D technology suite for manufacturers.|
|3D Systems||DDD||$1.4 billion||One of the industry’s pioneers. Deals with the production and development of 3D printers.|
|Proto Labs||PRLB||$1.3 billion||Digitally manufactures prototypes and then 3D prints them.|
|Stratasys||SSYS||$1.3 billion||Provides polymer-based 3D solutions.|
Source: YahooFinance. Data as of July 22, 2022.
The 3D Printing ETF
The 3D Printing ETF (PRNT) is managed by investor Cathie Wood’s advisory firm, ARK Invest. The fund tracks around 50 companies in the 3D printing industry spanning hardware, software, scanner, materials and printing centers. Some big name holdings include Microsoft, Autodesk, Xometry and PTC.
The fund tracks a tiered, equal-weighted index.
Annualized returns (as of July 19, 2022): -38.8 percent (1 year), -0.8 percent (3 year) and -2.5 percent (5 year)
Expense ratio: 0.66 percent
|Exposure: Gives investors exposure to many key players in and around the industry, touted by many as having tremendous potential.||Narrowly diversified: The ETF is concentrated in only one overarching industry.|
|Growth: The industry is projected to grow sales rapidly, giving investors an opportunity.||Volatility: As of July 18, 2022, the ETF is down around 38 percent year to date. Investors will need to have tolerance for risk.|
|Firm reputation: Cathie Wood and ARK are known for investing in innovative high-growth sectors of the market.||Still not steady on its feet: The 3D printing industry has grown tremendously, but is still solidifying itself as a developing market.|
|Expense ratio: An expense ratio of 0.66 percent is considered within a reasonable range.||Performance: The fund has negative returns in its 1-, 3- and 5-year periods thus far.|
The fund has wide exposure to the overall 3D printing market, both directly and indirectly. Some of the fund’s holdings, like PTC, deal primarily with 3D technology, whereas another major holdings, Microsoft, has more diversified lines of business.
For those who think the 3D market is an attractive industry, the ETF could be a useful and not-too-expensive way to invest in it, without having to do the analysis on the individual names.
Industries driving 3D printing adoption
3D printing has become particularly useful in manufacturing of certain industries. The health care, automotive, aerospace and defense industries specifically have been driving the adoption of mass 3D printing.
- Health care: 3D printing has truly taken off for health care science. Beyond what might first come to mind when thinking of health care 3D printing like a prosthetic leg or surgical tool, 3D technology has come so far that 3D bioprinting is now used to create living human cells! During the pandemic, 3D-printable open-source PPE equipment was created to help ease the equipment shortage. The 3D printing health care market was estimated to be $1.04 billion in 2020 and is projected to reach $5.8 billion by 2030, according to Allied Market Research. Increased pressure on hospital systems, larger patient pools and new biomedical applications are key factors driving this growth.
- Automotive: The automotive 3D printing market is forecasted to grow from $2.9 billion in 2022 to $7.9 billion by 2027, according to Markets and Markets, a B2B research firm. The pandemic exposed a need in the industry to decrease development time and a way to cut supply chain disruptions, which 3D printing can help achieve. Additionally, the surge in demand for electric vehicles has increased the demand for lightweight components, easily provided through 3D technology. Large investments by original equipment manufacturers has driven growth in this sector.
- Aerospace: Global aerospace 3D printing markets are expected to grow sales from $1.4 billion in 2020 to $6.8 billion by 2030, or more than 18 percent annually, according to Allied Market Research. An increase in demand for lightweight airplane components and easier prototyping have driven growth. Although 3D printing can be expensive and the aerospace industry has the added headache of regulatory oversight, industry insiders say they’re committed to developing new supply chains and processes.
- Defense: Like the aerospace industry, the defense industry is one in which extremely complicated parts are needed in relatively smaller volumes than can be provided by large-scale manufacturers. The 3D military market size is expected to reach $1.7 billion by 2027.
The future of 3D printing
With its many uses and integration into several different major industries, 3D printing is poised to make a significant impact on technology and manufacturing. Experts say that 3D printing will become a mainstream technology for mass production in the near future. Metal 3D printing is also positioned to expand, further allowing the aerospace and defense industries to incorporate the technology into their production.
The potential for applications in the health care industry is also clear. Especially after the pressures the pandemic put on hospitals, 3D printing applications will be a welcome innovation in times of emergency or supply chain disruption.
The skills to use 3D technologies will be a potential hurdle for growth. John Barnes, founder of the Barnes Group Advisors, said in a 2019 interview with AMFG that the “workforce element is really critical right now. There are not enough engineers, managers, executives who truly understand the technology well enough to work and develop a strategy to get what they need to get out of it.”
The Barnes Group launched an online course with Purdue University to provide engineers and others with the knowledge they need for 3D printing software and technology. Increased awareness and education will only propel the already growing niche sector even further.
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