The company places its advantages to being able to print with various materials like steel, ceramics, glass, bronze, and recently added iron alloys for industrial applications. On the surface, the company looks promising. Looking deeper, however, the company is working on a very small scale. ExOne Co (NASDAQ:XONE) shipped just five machines in the first quarter of 2013. It is on pace to break the 13 that it sold in 2012 and the five for 2011. Consequently, the company’s expenses have increased annually and net income has suffered, going from a $5.5 million loss in 2010 to a $10.2 million loss last year.
The company’s $9 million backlog isn’t enough to support expectations to invest $40-50 million over the next couple of years for expansion. ExOne Co (NASDAQ:XONE) will either need to take on additional debt to add to the $2.3 million it currently has or find a way to start making a profit with increased printer sales.
ExOne Co (NASDAQ:XONE)’s philosophy of serving industrial applications may be the wrong move. Competitors like 3D Systems Corporation (NYSE:DDD) serve everyone from individuals to industrial consumers. Some of its personal printers start around $1,000 and the company has been making positive net income since 2009. In 2012, #D Systems made almost $39 million.
Bottom line
Both Noodles & Co (NASDAQ:NDLS) and RetailMeNot are in crowded sectors but will likely prosper. Some suggest that Noodles & Co (NASDAQ:NDLS)’s existence since 1995 as a reason why its growth is over. The restaurant chain has no direct competition, however, and its products fit a niche which is rare for that industry. The fact it has been around so long gives the company a foundation. Meanwhile, RetailMeNot is already making a profit which is new to the online business sector.
While 3D printing looks like the future, the sector reminds me of the dot com bubble. There will definitely be a few survivors that become household names, but ExOne Co (NASDAQ:XONE) looks like it will be on the outside looking in. Its focus on industrial applications may cost it in the long run. Historically, personal products provide a recurring and predictable revenue stream that can’t be duplicated by industrial consumers.
Michael Carter has no position in any stocks mentioned. The Motley Fool recommends ExOne.
The article One of These IPOs May Be Setting Shareholders Up for a Huge Letdown originally appeared on Fool.com and is written by Michael Carter.
Michael is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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