3D Printing, Cathie Wood's Latest Disaster

Summary

The video discusses the rise and fall of the 3D printing industry, focusing on its initial hype, investor excitement, and eventual disappointment. It highlights the promises of 3D printing to revolutionize manufacturing, led by companies like 3D Systems and supported by investors such as ARK Invest. However, due to technical challenges, high costs, and oversaturation of the market, many 3D printing companies have suffered major losses. While 3D printing remains valuable for niche applications like aerospace, broader adoption and profitability have fallen short of early expectations.

Takeaways

• 📉 In 2020 and 2021, several 3D printing companies went public through SPAC mergers, but most have lost over 95% of their value, nearing bankruptcy.
• 🔨 3D printing promised to revolutionize manufacturing with reduced lead times, enhanced efficiency, and the ability to produce complex parts that traditional manufacturing couldn't.
• 💼 Kathy Wood's ARK Invest launched a 3D printing ETF in 2016, but it has underperformed significantly, declining by 1% while the S&P 500 grew over 160%.
• 🏠 The initial consumer hype cycle for 3D printing around 2012 suggested that 3D printers would become household items, but this never materialized due to high maintenance needs and expensive materials.
• 🚫 Consumer 3D printers are typically limited to soft plastics, and the cost and complexity make it impractical for the average household, with most people opting to buy products online instead.
• ✈️ Kathy Wood shifted focus to industrial 3D printing for sectors like aerospace and healthcare, where complex parts could be produced more efficiently and with fewer components.
• 📉 Despite initial growth, companies focused on industrial 3D printing like Desktop Metal, Velo3D, and Markforged saw their revenues decline due to market saturation and increased competition.
• 🏭 Metal 3D printing is expensive, with higher costs for printers and metal powders, making it less viable for mass production compared to traditional methods that benefit from economies of scale.
• 🛠️ While 3D printing has specific uses in industries like aerospace and automotive, it remains niche due to its cost structure and limited practical applications.
• 🤖 The potential future of 3D printing may lie in software integration, allowing printers to collect data and improve efficiency, but widespread adoption has been limited by competition and niche demand.

Q & A

What were the key reasons for the initial excitement around 3D printing technology?

Investors were excited about 3D printing technology due to its potential to reduce lead times, enhance production efficiency, and create complex parts that traditional manufacturing couldn't produce. There was also hope that 3D printing could revolutionize various industries by enabling rapid prototyping and custom manufacturing.

Why did the 3D printing ETF launched by Cathie Wood's Ark Invest underperform despite the overall bullish market?

Cathie Wood's 3D printing ETF declined by 1%, underperforming the broader market, which saw the S&P 500 rise by more than 160%. The ETF’s underperformance was due to the failure of 3D printing companies to meet the high expectations of growth and profitability, as many of these companies have since lost over 95% of their value and are now facing bankruptcy.

What were the challenges that prevented consumer 3D printers from becoming mainstream?

Consumer 3D printers failed to gain widespread adoption due to their complexity, constant need for maintenance, and steep learning curve for design software. Additionally, the printers were limited to soft plastics, which were not durable for many applications, and the cost of materials was high compared to simply buying products online.

How did the Chinese competition impact the consumer 3D printing market?

Chinese manufacturers flooded the market with low-cost consumer-grade 3D printers, driving down profit margins. This intense competition made it difficult for companies like 3D Systems to sustain profitability, leading to a significant decline in their stock price.

What was Ark Invest's thesis regarding industrial 3D printing?

Ark Invest's thesis focused on the use of 3D printing for industrial applications, especially in sectors like aerospace and healthcare. They believed that large-scale industrial 3D printers, which could produce complex metal parts, would drive the next phase of growth in 3D printing, as opposed to the consumer market.

Why does 3D printing make more sense for certain industries, such as aerospace, than for mass manufacturing?

3D printing makes sense for industries like aerospace because they require complex parts that are produced in small quantities. Traditional methods struggle with these complex geometries, but 3D printing can reduce the number of parts and weight, offering advantages like fuel efficiency. However, mass manufacturing benefits more from economies of scale, which 3D printing lacks.

What were some of the key disadvantages of 3D printing metal parts?

The disadvantages of 3D printing metal parts include the high cost of industrial 3D printers, expensive powdered metal used in the process, and the fact that the parts produced are often weaker than those made using traditional manufacturing methods.

How did the 3D printing companies that went public via SPAC mergers perform after their IPOs?

Companies like Desktop Metal, Velo3D, and Markforged, which went public via SPAC mergers, experienced dramatic declines in value, with all of them losing more than 95% of their initial valuations. They faced intense competition and had difficulty maintaining profitability.

What is the relationship between 3D printing and companies like SpaceX?

SpaceX uses 3D printing for manufacturing parts of its Raptor engines, showing that 3D printing can be valuable in highly specialized use cases. However, the suppliers of these parts, like Velo3D, face competition from other manufacturers, limiting their pricing power and profits.

What role could software-enabled 3D printers play in improving the industry's future?

Software-enabled 3D printers could improve the 3D printing process by collecting data during each print, helping manufacturers refine and optimize production. This could potentially provide more value to printer manufacturers by allowing them to offer continuous improvements, similar to how Tesla updates its vehicles with over-the-air software updates.