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Stratasys (NASDAQ: SSYS) Acquires Makerbot

Written By Jason Stutman

Posted June 20, 2013

I was riding the elevator on my way to work this morning and overheard a conversation between two other gentlemen on the lift. 3d head

They were talking about 3D printing.

“It just scans and makes anything you want,” said the informer. “They can even make a gun!” he told the listener as he walked onto his floor.

The doors closed and I kept the conversation rolling. “The company is called Stratasys,” I told the remaining passenger. He looked at me quizzically but also with a sense of excitement. “The machine that built the gun, it’s made by Stratasys.”

It was my turn to get off, and as I exited, the man left me with this: “It’s a crazy future we live in.”

But crazy isn’t the best choice of words. To call the future crazy makes it seem as though things cannot be foreseen.

Events and happenings only seem crazy when they come out of nowhere. In all reality though, this only happens if you weren’t looking close enough. If you are well enough informed, you begin to expect what other people see as crazy.

Amazing, Not Crazy

I hate to brag, but I can’t say I didn’t tell you so.

Actually, that’s a lie – bragging is fun.

On Tuesday, I wrote this article telling Energy and Capital readers that it was likely that industrial 3D printing company Stratasys Ltd. (NASDAQ: SSYS) would buy consumer 3D printing company Makerbot, if the company didn’t just go public on its own.

On Wednesday, guess what happened? Stratasys bought Makerbot.

Makerbot has received 4.76 million shares of Stratasys in return for providing the latter company with full capital stock. At the time of the deal, this meant a purchase value of $402.7 million. I told readers the current valuation was $300 million, so a $400 million tag was well within reasonable expectations.

I also predicted a short bullish wave of hype following the acquisition. Stratasys jumped from $84 to $88 dollars within 20 minutes this morning.

strata bump

If you missed the bump, that’s alright. I’m not really a fan of day-trading, to be perfectly honest. I have a great respect for technological capability and am well aware that computer algorithms already rule that game.

And that’s exactly why I prefer to lengthen my time horizon.

I am going to reiterate just one more thing I wrote on Tuesday – Stratasys’s acquisition of Makerbot means long term growth for the company.

Stratasys has historically been an additive manufacturer (that’s just a fancy term for 3D printing) focused in the industrial marketplace. Its cheapest printers ran close to $10,000, closing them off from the entry-level consumer base.

And that’s exactly where Makerbot comes in. Makerbot produces high-end 3D printers for entry-level engineers and designers. These printers start around $2,000, bridging the gap between these two customer bases.

Stratasys now has access to a rapidly growing consumer market (Makerbot holds an estimated 25 percent of the entry-level 3D printing market) that will also feed into its current operations.

Makerbot’s expected 2013 revenue of $50 million would account for close to 20 percent of Stratasys’s current sales. Even better, this expected revenue puts Makerbot sales up 500 percent from 2012. At that rate, Stratasys would make money back in just a few years.

And with Amazon (NASDAQ: AMZN) kicking open the doors to the entry-level market with it’s dedicated 3D printing store, there really is no stopping the household 3D printing revolution.

Keep reading and remain informed.

Turning progress to profits,

  JS Sig

Jason Stutman

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