Technology

Reversal of Fortune, and Outlook, for 3D Systems via Short Seller

3D Systems Corp. (NYSE: DDD) has seen close to a four dollar swing so far on Tuesday. The stock received a very positive research report calling for upside of up to $85 earlier and that had shares up, but now some outside commentary is hitting the stock and long-term investors looking for a profit on the 3D printing craze may want to pay attention to it.

Word is out that Whitney Tilson, a value investor and short seller, of T2 Partners has called 3D Systems one of the great shorting opportunities in a market of massive stupidity. His view is the multiple of sales and another person’s one-one-one with the CEO of 3D Systems act as red flags.

Readers should be aware that this is far from the first attempt to pound down 3D Systems by a short seller. We were given a detailed plan on why the company’s financial score merited a short sale by a short-selling ETF run like a hedge fund previously. That call was back on September 11 and the stock price on that day closed at $52.10 on that day, and now shares are trading up closer to $80.

Short sellers have been active in 3D Systems and others in the massive growth sector for some time. The short interest recently was shown to have dropped off a cliff at the NASDAQ short interest site. The November 15 settlement date’s short interest was 19.73 million shares, down from 26.28 million shares just two weeks earlier. That mid-November reading was the first time the short interest dipped under 20 million shares all the way back to February.

Shares of 3D Systems were up as high as $79.93 in early trading on Tuesday morning but are at $76.50 shortly before 1:00 PM. We would caution that the consensus analyst price target is now around $69.50, implying that the stock’s one-year price target leaves 10% if the average of all analysts turns out to be correct.

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