Wall Street is trading shares of 3D printing company 3D Systems as if it can print money, according to hedge-fund manager Whitney Tilson.
On Tuesday, the Kase Capital founder blasted the maker of three-dimensional printers for an overly lofty valuation of $8 billion.
“[3D Systems] is one of so many unbelievably great shorts out there right now,” Tilson said in a widely distributed email.
The $78 stock is trading at 63 times next year’s earnings despite “deteriorating” fundamentals, he said, referring to the Rock Hill, S.C., company’s move in October to lower its earnings guidance for 2013.
Shares of 3D Systems dropped about $3 a share on Tilson’s missive to a low of $74.86 around 1 p.m. The stock recovered, however, to end the day up 1.5 percent, to $78.01 a share, on the NYSE.
The printing company didn’t return a request for comment, but Tilson is not alone in thinking 3D shares are ripe for a tumble. As of Nov. 15, short interest in 3D Systems hit 19.7 million, or 20 percent of its shares outstanding.
That puts 3D Systems — which was valued at just $2 billion in 2012 — in the same league as Elon Musk’s Tesla Motors when it comes to favorite short targets.
Shares of 3D Systems are up a whopping 119 percent this year.
Its peers, including ExOne Co. of North Huntingdon, Pa., are seeing similarly robust share surges.
Daniel Holland, an equity analyst at Morningstar, said the 3D printing industry as a whole is trading as if 20 percent of US households will own a 3D printer in the next decade.
“For me that’s where the whole argument starts to get a little shaky,” he said.
Holland, who has a $35 price target on shares of 3D Systems, thinks closer to 5 percent of households will own the high-priced gadgets over the next 10 years.