PRNT: Patience Required As 3D Printing Finds Its Spot In The Market

With time, 3D printing will likely become profitable in the robotics and automated industries. The fact that many industries still depend on outsourcing to produce various products could make 3D printing a game changer. These industries can outsource their operations. This would not only save time and money, but could also reduce liability by avoiding potentially untrustworthy third party sellers. 3D printing is also becoming increasingly popular. You will be able to automate your system This makes it more valuable to both small and large businesses.

Although 3D printing may be important for certain endeavors in the future, the industry has yet to fully grasp robotics and automation. Investors may do better to avoid this market as it is still clouded with uncertainty and risks regarding the full potential of robots and artificial intelligence. Medium-term, the exposure will be broader. This is why I rate The 3D printing ETF (BATS:PRNT( a Sell.

PRNT is unique in that it is the only 3D printing ETF publicly traded. The 3D printing sector has plenty of room to expand across different sectors. This could lead to the creation of ETFs like PRNT. This ETF may be a pioneer in the future if 3D-printing takes a larger role in the ETF market. PRNT is still focused on 3D Printing and not the automation, artificial intelligence, and robotics which can fuel the 3D Printing Industry in the long run. For the moment, I think this ETF is at a major disadvantage.

Strategy

PRNT uses the Total 3D-Printing TR USD Index, and a full replication method. Investors can gain a more comprehensive exposure to the 3D-printing market using this method while avoiding certain transparency concerns. At least 80% the companies that make up the designated index get at least half their revenues or earnings from 3D printing related activities. This includes the development and distribution of 3D printers, materials, or software. This index is dominated by companies that are involved in 3D-printing hardware, 3D-printing simulation software, or 3D-printing materials.

Holdings Analysis

This ETF invests mostly in technology stocks, with just over one-third of the sector allocation going to nontechnology stocks. Non-tech stocks tend to be industrials. Healthcare, basic materials and consumer cyclical are also present in smaller amounts.

PRNT has a majority of its holdings in the United States. A little over a fourth of them are outside of this country. This ETF includes a variety of non-U.S. countries, such as France, Switzerland and Germany.

The top 25 holdings of this ETF also account for 84%. PRNT is a relatively small ETF with only 64 holdings. This ETF’s narrow and highly-specialized focus could be a threat in the future due to concentration risk.

ETF Performance and Future Implications

PRNT vs. Alternatives: To Niche for Their Own Good

While PRNT may be the only 3D Printing-specific ETF, 3D Printing is similar to ETFs which have a wider focus. Potentially comparable alternatives might include the Global X Robotics & Artificial Intelligence ETF (BOTZ) and the Robo Global Robotics and Automation Index ETF (ROBO). Below, we show the relative YTD performances of BOTZ and ROBO compared to PRNT.

This ETF will have a much harder time capitalizing, and fully benefitting from technology trends than potential alternatives. I still believe 3D printing can have a place in many emerging industries. It is possible to benefit from these trends by investing in less specific ETFs. These include those that cover robotics and automation as well as AI.

PRNT vs. The S&P: Burdened By Volatility

Compared to the S&P, this ETF’s price trend during 2023 has been quite erratic.

PRNT’s price oscillations are evidently larger than that of the S&P and though it reached some notable heights so far this year, it also appears to have declined just as fast as it jumped. The volatility metrics of this ETF are alarming, as can be seen from the chart below.

PRNT’s high level of volatility becomes even more evident when looking back five-years.

PRNT may struggle with a lack of momentum and erratic prices in the long run.

Artificial Intelligence (AI) and 3D printing

AI will enhance 3D printing on the long-term. AI can automate industrial 3D-printing, which will strengthen the supply chain, and make 3D-printing companies more efficient. AI could improve the quality of printing and enable more intricate designs, as it can detect errors more quickly and react to disturbances faster than humans. AI could also analyze consumer data in order to offer more personalized products and service. AI integrations in the 3D-printing industry could ultimately increase profits and push up the PRNT price.

Sectors to Benefit from 3D Printing

Healthcare

As shown in the graph, healthcare is expected to play a major role in 3D printing in the future.

Human contribution to the development of implants, surgical models and prosthetic limbs could be reduced by using enhanced 3D printing. AI-based analysis of patient information could improve the usability and personalization of these products. These developments could encourage more healthcare facilities to use 3D printers, resulting in higher revenues for 3D print companies.

Aerospace

Aerospace industry may increasingly use 3D printer technology, as it advances and offers more. According to the chart below the Aerospace 3D Printing industry could expand significantly by the end of this decade.

3D printing can be used to produce more aerodynamic, lightweight components with less capital expenditure and less waste. 3D printing is not only useful for design and construction but also in repairing and maintaining aircraft.

Negative Outlook and Future Concerns

Workforce Disruption

3D printing, AI and other revolutionary technologies have the ability to both help and replace humans in certain ways. As an example, many manufacturing workers may find themselves out of work as 3D printing technology proves more efficient. This could result in new laws and regulations relating to the role of 3D printers within the workforce due to ethical concerns or possible stigma. These could be detrimental to this industry. A 3D printer that is becoming more advanced could also lead to higher skills requirements, which could be difficult to meet after a while. A talent shortage may have a negative impact on the profits of 3D printing firms.

Lack Of Standardization

3D Printers are not subject to any universal standards of technology or design. Due to this, each 3D printer has its own set of features and capabilities. It is difficult to compare 3D Printer models, and determine if one printer is better than another. It could be difficult for businesses to effectively market 3D Printers in a fashion that consumers understand and can trust. Both individuals and corporations may be reluctant to adopt 3D printer technology due to these conditions, which could affect PRNT’s performance.

The conclusion of the article is:

I believe that 3D printing will be a part of many companies as technology improves and offers more benefits to manufacturing. PRNT might struggle to gain momentum until this happens. As robotics and automation continue to grow and gain acceptance in society, it is better to invest in a fund that has a broader focus. Due to these factors, I rate the PRNT stock as a Sell.