ExOne Co (XONE): Can the Offer Turn the Business Around?

The bubble surrounding ExOne Co (NASDAQ:XONE) seems to be deflating, and management is looking for a way to revamp business activity. The 3D printing manufacturer seems to have hit a ceiling with respect to sales after a boom due to the innovative product introduced to the market. Last quarter, recovering sales led to a smaller loss than on previous quarters. However, the business remains at a loss and a new strategy has been announced to keep the firm out of risk.

After reaching an all-time high stock price on August 13^th, price continues to dwindle and lost $10 so far. In an effort to refloat the business, the company has announced that 2.7 million shares will be offered at a 4.8% discount price ($62). The announcement is expected to reinforce growing sales, bring in new cash to balance accounts, and reduce net loses.

Total shares are expected to come from two sources: 1.1 million from the company itself, and another 1.6 from shareholders. ExOne Co (NASDAQ:XONE) expects to close the deal next Friday, September 13^th. The transaction is expected to garner $64.8 million after deducting the underwriting discounts, commissions, and offering expenses.

With a market close to saturation, ExOne Co (NASDAQ:XONE) is yet to announce any meaningful modifications to its business model, or find a niche were to offer stronger competition. For example, Stratasys, Ltd. (NASDAQ:SSYS) is the largest manufacturer of 3D printing equipment and, as such, enjoys of scale advantages and leverage over prices. Moreover, by specializing in the plastics segment, it has become a leader in 3D printing for the aerospace industry. 3D Systems Corporation (NYSE:DDD) is the market leader and holds the largest portfolio, allowing the business to compete in all segments and develop partnerships to reach a wider customer base.

ExOne Co (NASDAQ:XONE) has so far made no announcement concerning acquisitions or the introduction of new products. Also, research and development is expected to be impacted by lower sales as cash reserves continue to dwindle, making the company ever less attractive. The favorable aspect of the business is the high switching costs but this characteristic alone may prove fatal in the end if the company is not able to satisfactorily serve its current customers.

Disclosure: Jodor Jalit holds no position in any stocks mentioned