Why Investors Are 'Fundamentally Wrong' About 3D Printing Stocks

The 3D printing space is taking a hit this week after Stratasys, Ltd. SSYS provided weaker-than-expected guidance.

Stratasys fell more than 30 percent Tuesday, but it wasn't the only one feeling the burn. 3D Systems Corporation DDD and ExOne Co XONE also declined as investors abandoned the sector.

"There are some companies that are very conceptual and investors get carried [away] by a lot of hot air," Global Equities Research analyst Trip Chowdhry told Benzinga. "It's not only 3D [printing] industry that we are skeptical about. There are [other] hyper-inflated stocks in the market which have worsening fundamentals."

Chowdhry named GoPro Inc GPRO, a Wall Street star that is actually up more than 3 percent, and Box Inc BOX, which is up more than 1 percent. He believes their valuations are overinflated.

Related Link: Canaccord Cuts Stratasys Price Target As Shares Fall 30%

"These are companies that look interesting but they are [speaking] to a very narrow audience," Chowdhry added. "Investors have got the 3D space fundamentally wrong. They have missed the basic behavior patterns that include influencing of a society. What is that? We are living in an impatient society. We are living in a real-time economy. Now you think about 3D Systems. Depending on the kind of thing you're trying to get printed, it takes between 30 minutes and five hours to get it completed. Do you think this is a mass-market phenomena? Not at all."

'Good Companies'

Chowdhry isn't against the 3D printing space -- he simply thinks the industry needs to be put in its place.

"These are good companies but in a very narrow market for a very narrow audience," said Chowdhry. "The valuation should be reflective of that, not [on the belief that the] whole world is going to be 3D printing. That's not going to happen. The same is [true] with GoPro. Investors are getting carried away. Some say, 'This is next media company.' Media company for whom? How big is the audience? How are they going to monetize?"

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.