Ron's Rant: Market Growth Projections

The following is a Ron’s Rant….it may not be useful, educational or accurate but something I felt like documenting at this moment.

Since I was fortunate enough to build my career in the Additive Manufacturing (3d printing) industry, I still keep a very close to the companies, news and advancements of the industry.  The past few years have been crazy with so many new, non-technical, usually smart people that are keenly interested in the industry for their own gain.  Having the advantage of a long history and strong direct experience in the field, it’s very easy to see the BS when it hits the pages from articles, blogs, etc.

With the public market interest so high, there are a ton of folks from the investor community (traders, analyst, etc.). While most that I have interacted with are very smart and actually understand what you say, it’s interesting to read some of the blogs and reports from those that may not actually understand what they write.

This morning I was reading an analyst review of a recent 3D Systems analyst presentation. He is making his case as to why the stock has potential (which I have no comment on). What struck the funny bone was one of his listed reasons (see below cut directly from the report):

3. The global manufacturing market presents a $10.5 trillion opportunity, and the 3D printing market accounts for just 0.1% of the market. There is a large market for the 3D printing industry to grow into, and if 3D printing was just 1% of the overall manufacturing market, the size of the market would be around $105 billion, or 10 times larger than it is today.

Ok….many years ago when I was aggressively studying business to help increase my likelihood of success as an entrepreneur, I recall an article by some proven business person (Jobs, Gates, Drucker, etc.) that was talking about all of the business plans of the late 90’s (dot com boom) and how ridiculous it was to see the market growth projections for the company to be based on the premise that if they only sold their product to 1% of the Chinese population, then they would be worth the zillion dollar valuation they were seeking.

Everyone knows that every Chinese person needs a whoopie cushion, dog food, US Road Map, etc.  There was no reasonable correlation to their product and the Chinese market. Just that if they capture the magical 1%, then “hooray!"  

It’s a weak and illogical approach to estimate a markets growth, however, the guy that wrote this article just used the same logic to extrapolate the growth of the 3d printing market without any direct correlation as to why 3d printing would substitute 1% of an existing, mature market. Perhaps with pixie dust and strong dose of hope, this might happen, but having a real reason “why” provides more creditability.

The following is the link to the entire article for your enjoyment (you may have to cut/paste the link):

http://seekingalpha.com/article/2264463-3d-systems-a-look-at-analyst-day-and-the-future?uprof=45