Why 3D Systems Stock Just Exploded 84.5% Higher

What happened

Shares of 3D printer maker 3D Systems (NYSE:DDD) just jumped 84.5% in 11:30 a.m. EST trading -- and yes, you read that right.

Early this morning, 3D announced the successful sale of its "non-core software businesses for cash proceeds of approximately $64 million." It also added a preview of its Q4 2020 financial results, predicting that revenue will far outperform analyst expectations and come in between $170 million and $176 million for the quarter.  

Image source: Getty Images.

At last report, of course, analysts had been telling investors to expect less than $140 million in Q4 sales from 3D, so what we're looking at here is an almost certain earnings beat of historic proportions -- but even that wasn't the end of the good news 3D had to report.

With its $64 million cash windfall in hand, 3D says it has been able to pay off all of its "senior secured term" debt, and no longer needs to continue selling stock, and diluting shareholders, through its previously announced "at-the-market" stock sales program. (By the way -- at this point a hat tip is appropriate to the analysts at investment bank Craig-Hallum, who predicted all of the above two months ago).

Essentially debt-free now, and free to focus on its two core 3D printer making businesses (industrial and healthcare), the company also noted that in addition to the better-than-expected sales, it is likely to report anywhere from $11 million to $19 million in pro forma profit for Q4. Generally accepted accounting principles (GAAP) results could still be as bad as an $8.6 million loss, but there's at least the possibility that 3D will eke out a GAAP profit of as much as $0.5 million this quarter.

After a second quarter of 20%-plus revenue growth, and with GAAP profitability finally within its grasp, 3D Systems CEO Jeffrey Graves concluded his note this morning saying, "With the benefits of our organizational alignment, our technology and application leadership, and our relentless focus on operational execution, we are more optimistic than ever about the exciting future we see ahead in 2021 and beyond."

It seems investors agree with that assessment.