Why Shares of Stratasys Ltd. Fell 21% in October

By Markets Fool.com

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What happened

Shares of 3-D printer company Stratasys Ltd. (NASDAQ: SSYS) fell 20.6% in October, according to data provided by S&P Global Market Intelligence, after a rush of bad news hit the stock during the month.

So what

On the earnings side, rival Proto Labs reported quarterly results that showed revenue up 15% and net income down 3%. But guidance was for a slight decline in revenue and a big drop in earnings as competition impacts the market. Because it's one of the strongest companies in the rapid-prototyping industry, that suggestion hit its competitors' share prices hard.

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The other negative news was that GE dropped its bid to buy SLM Solutions, which lead analysts to conclude that Stratasys wouldn't be a buyout target in the near future. Without the idea of a potential windfall from a buyout supporting the price, investors sold off shares.

Now what

Stratasys has built a business that needs to grow if it's going to become profitable, and if the industry trends hold, that will be tough to accomplish. The customer base looking to buy 3-D printers just isn't as large as it had expected, and now rivals are cutting into its market share in the highly competitive market. The future isn't looking as bright as it once was for Stratasys.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Proto Labs. The Motley Fool recommends Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.