OK, maybe I was wrong after all. Maybe gunmakers Smith & Wesson Holding Corporation (NASDAQ:SWHC) and Sturm, Ruger & Company (NYSE:RGR) should start to worry.
After the debut of the first all-plastic 3-D-printed gun, I said there were a lot of limitations that meant gunmakers didn’t have to worry about mass manufacturing that would threaten their profits. The plastic gun could only withstand the stresses of firing a single shot, and it needed an expensive, high-end printer to create it.
With the government quickly shutting down Defense Distributed’s spec-distribution website, and with printer maker Stratasys, Ltd. (NASDAQ:SSYS) repossessing the first printer the company leased (the plastic-gun maker subsequently used a second-hand model to print the gun), the pace of technology’s advance in the 3-D space is moving much faster than anticipated.
Now comes a 3-D-printed gun that can be printed on a consumer-grade printer, can fire multiple rounds — and can be made for just $25!
The so-called “Lulz Liberator,” named after both Defense Distributed’s breakthrough weapon and the desktop printer it was printed on — a $1,725 Lulzbot A0-101 — took just two days to make, according to Forbes, and used just $25 worth of consumer plastic.
So it’s only natural that this “war” also has its own special 3-D-printed ammunition. A separate engineer has achieved success in printing and firing two plastic shotgun slugs because, as he told Wired magazine, “a real gun shooting plastic bullets is more fun than a plastic gun shooting real bullets.” But how long before the two concepts are melded and we have plastic guns shooting plastic ammo?
Two weeks ago I would have thought it would be years before we saw such an event. At the pace the 3-D industry is moving at today, it could be just a matter of days.
And that’s where the problem for Smith & Wesson Holding Corporation (NASDAQ:SWHC) and Sturm, Ruger & Company (NYSE:RGR) could arise. The demand for guns is huge. As has been well documented, the massive number of background checks by the FBI is at unprecedented levels, which, as I pointed out last time, has surpassed in the first four months of 2013 all of the background checks completed in 2004 . With gunmakers reporting a huge growth in backlog, it’s only a matter of time before a proliferation of plastic weaponry begins to soak up part of that excess demand — demand that is also creating ammo shortages.
Coupled with the Department of Homeland Security’s submitting numerous purchase orders for billions of rounds , there’s a dearth of ammo in the marketplace. Major ammo makers such as Alliant Techsystems Inc. (NYSE:ATK), Hornaday, and Winchester have stated that they have shifts working around the clock, seven days a week, trying to keep up with demand but are simply unable to do so. So perhaps plastic ammo, like plastic guns, could be the solution to the problem.
I still see the profits of Smith & Wesson Holding Corporation (NASDAQ:SWHC) and Sturm, Ruger & Company (NYSE:RGR)remaining intact, but the industry innovations under way do give me pause at the ability of Stratasys, Ltd. (NASDAQ:SSYS) and 3D Systems Corporation (NYSE:DDD) to maintain their leadership in the face of low-cost, open-source alternatives.
They’ve been some of the prime movers driving the industry forward, and also some of its biggest beneficiaries. Stratasys’ stock is up 80% year over year, while 3D Systems Corporation (NYSE:DDD) is 170% higher, but with both companies trading north of 30 times earnings estimates, they may see their returns miss the target.
Because 3-D printing is still in its infancy, it may be you can still successfully invest in either Stratasys or 3D Systems Corporation (NYSE:DDD) and still shoot out the lights.
The article Keep 3-D Printing Companies in Your Crosshairs originally appeared on Fool.com.
Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends 3D Systems and Stratasys; owns shares of 3D Systems, Stratasys, and Sturm, Ruger; and has options on 3D Systems.
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