Organovo (ONVO) Plunges, 3D-Printer Segment Follows

Joel Anderson |

Shares in 3D-bioprinting company Organovo (ONVO) plunged almost 25 percent, finally experiencing the fall that many shorters have been predicting for weeks. The stock has been on a run, more than doubling since October 22 when studies revealed that one of their 3D-printed livers could retain key functions for up to 40 days. However, now Organovo may appear to be coming back to earth.

Revenues Still Absent

The potential inherent in Organovo’s technology is clear to most as the long-term goal of using 3D printers in the biotech sector is to generate organs that could be transplanted into the human body. And even if that never becomes a reality, the short-term potential of using 3D-printed tissue in early-stage clinical trials is one that could drive major profits for Organovo for years.

However, Ogranovo’s Tuesday plunge could be an example of the company’s balance sheet finally catching up with it. The company posted just $110,000 in revenue in its last quarter, and has failed to crack $500,000 in revenue in each of the last four quarters. In the last three quarters reported, Organovo has had losses of $9.57 million, $16.12 million, and $3.77 million.

While 3D-printing has been a hot area for investment, investors may be losing some of their initial fervor in companies like Organovo in lieu of more consistent profits. Organovo’s first commercial product, a 3D-printed liver for use in clinical trials, isn’t expected to hit the market until December of 2014, meaning investors will still have over a year before they should see any real profits.

Bad Day for Whole Segment

And while 3D printers are not a monolith, Organovo’s bad day appeared to ripple across the industry, dragging down most of the other 3D-printing companies despite the fact that Organovo operates in the very specific sub-segment of 3D-bioprinting.

Germany’s Voxeljet (VJET) , which just held its IPO on October 18, saw losses reach 20 percent before rebounding to hold them under 15 percent. This comes after a month that matched gains from Organovo as the stock more than doubled in value following a major post-IPO bounce.

Also falling were 3D Systems (DDD) , which plunged almost 7 percent, ExOne (XONE) , off over 8 percent, and Stratasys (SSYS) , which lost almost 9 percent. This may feel particularly unfair for 3D Systems, which has posted consistent revenue growth for five straight quarters and has been profitable for over a year.

Buyout Speculation May Have Partially Fueled Rise

The continued growth of Organovo’s stock well after it reported clinical results, though, could point towards other, more speculative forces at play. One of which could be anticipation that Hewlett-Packard (HPQ) would buy out the company. The computer giant has recently announced that it would be entering the 3D printing market, one that Credit Suisse (CS) estimates could reach $11 billion in revenues by 2020. Widespread speculation had HP buying up 3D-printing companies to access their technology and patents.

As such, Tuesday’s sell-off throughout the industry could indicate that the markets have lost some measure of faith in a pending buying spree from HP. If that’s the case, it would explain the broad sell-off of 3D-printing companies that cuts across sub-segments and industries.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ONVO Organovo Holdings Inc. 2.94 0.05 1.73 998,955
SSYS Stratasys Ltd. 17.83 0.30 1.71 632,955
XONE The ExOne Company 9.87 0.56 5.96 171,329
VJET voxeljet AG American Depositary Shares each repres 3.36 -0.04 -1.18 92,856
HPQ HP Inc. 15.12 0.06 0.40 8,377,096
DDD 3D Systems Corporation 13.54 0.26 1.96 1,560,954
FRSSD Fairmount Resources Inc n/a n/a n/a 0

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