AnalysisStratasys’s stalled revolution: Can Fortissimo revive the 3D printing pioneer?
Analysis
Stratasys’s stalled revolution: Can Fortissimo revive the 3D printing pioneer?
The Israeli investment fund bets $120 million on a company grappling with stagnant growth, failed mergers, and fierce rivals.
At first glance, it’s hard to see why Stratasys, a pioneer in 3D printing, is considered a disappointment. On the surface, the company generates over half a billion dollars in annual revenue, attracts interest from potential buyers, and has traded in recent years at a market value of around $1 billion.
However, a closer look at the company’s financial statements, stock performance, and overall trajectory over the past decade makes it clear that this is a big dream that hasn’t come true. Revenues have stagnated at around $500–600 million annually for a decade, its market value has plummeted from $7 billion to $700 million, and, above all, the surge of mergers reflects a market that turned out to be much smaller than initially expected.
A decade ago, Stratasys was at the forefront, setting the pace in the innovative 3D printing sector, which once seemed poised to disrupt all of industrial manufacturing. In 2014, it reached record revenues of $750 million—then everything stalled. Similar to the autonomous vehicle revolution, which has advanced more slowly and incrementally than initially anticipated, the 3D printing “revolution” has proven to be more localized and gradual, without completely replacing traditional manufacturing methods.
Identifying Growing Niches in the Industry
When Yuval Cohen’s Fortissimo Capital acquires a stake in Stratasys at a 10% premium to its current Wall Street value, the fund isn’t expecting a tenfold return on investment. On one hand, the ambitions are more modest; on the other, Stratasys appears to have weathered most of its major challenges. Its future now depends largely on its ability to identify growing niches in 3D printing, maintain technological leadership, and focus more on operational management and less on strategic gambits.
Fortissimo is investing $120 million, giving it a 15% stake in total in Stratasys. It’s reasonable to assume that if things go according to plan, the fund will seek to increase its holding. However, to raise its stake beyond 25%, Fortissimo would need to launch a formal takeover bid, as a simple acquisition process would no longer suffice.
Fortissimo’s advantage in this deal stems from its deep familiarity with the printing industry—thanks to past holdings in companies like Nur Macroprinters and Kornit Digital, as well as its current stake in Tritone Technologies, a metal 3D printing company founded by Kornit’s former CEO.
The Nano Dimension Factor
What is Fortissimo looking for in Stratasys, and what will determine whether it increases its stake? Surprisingly, the main catalyst for Fortissimo’s move isn’t Stratasys itself but its long-time adversary—Nano Dimension. Over the past two years, Nano Dimension has made more than ten attempts to take over Stratasys. These repeated takeover bids distracted management and further strained the company during an already challenging period.
Nano Dimension, led until recently by Yoav Stern, was embroiled in its own internal power struggle. In an effort to create meaningful business activity, Stern attempted to acquire Stratasys for $1 billion. About a month ago, Stern was ousted, Nano Dimension’s board was overhauled, and Stratasys breathed a sigh of relief. Fortissimo seized the moment and moved in.
However, even after Fortissimo became Stratasys’s largest shareholder, Nano Dimension remains a thorn in its side, holding a 12% stake acquired during its failed takeover campaign.
An Obstacle on the Path to Growth
Nano Dimension also complicates matters through its agreement to acquire Desktop Metal, the third player in the tangled 3D printing triangle. Desktop Metal offers technologies and products that Stratasys lacks, particularly in metal printing, while Stratasys specializes in plastic polymers. Stratasys attempted to acquire Desktop Metal in 2023, but Nano Dimension, as its largest shareholder at the time, blocked the deal—only to pursue Desktop Metal itself later.
It appears that Fortissimo’s investment in Stratasys was made under the assumption that Stern’s ousting from Nano Dimension would lead to the cancellation of the Nano-Desktop merger, reopening the opportunity for Stratasys to acquire Desktop Metal. Nano Dimension is set to pay $135 million for Desktop Metal—a sum Stratasys could afford to match through a mix of shares, potential dilution of Nano Dimension’s stake, and cash reserves bolstered by Fortissimo’s investment. Even before Fortissimo’s involvement, Stratasys had $140 million in cash, which will now grow to $260 million.
Fortissimo’s Challenge: Reigniting Growth
Fortissimo’s main task is to leverage Stratasys’s market position to reignite growth. The company has faced consecutive years of losses, but in mid-2024, it implemented efficiency measures—including a 15% workforce reduction—to reach breakeven by 2025. After laying off 300 employees, Stratasys now has 1,700 staff members, a quarter of whom are based in Israel. These cuts are expected to yield $40 million in annual operating savings.
In parallel with the Fortissimo deal announcement, Stratasys released preliminary Q4 2024 results: $150 million in revenue and an operating loss of around $14 million. However, the company reported positive cash flow from operations for the first time in two quarters—a promising sign amid its financial struggles.
Where Growth Could Come From
Stratasys’s growth could stem from several sources. The most obvious is entering the metal 3D printing market through the acquisition of Desktop Metal, though this would initially strain profitability, as Desktop Metal is still posting significant losses.
Another growth avenue is capitalizing on Stratasys’s large installed base of printers, estimated in the tens of thousands of units. Similar to the traditional inkjet printer market, a stable, high-margin revenue stream comes from selling consumables and peripherals needed for ongoing printer operation.
Additionally, Stratasys could expand into new markets, such as dental applications. Dentistry has enthusiastically embraced 3D printing, with most crowns now produced this way. The denture market alone is estimated at $10 billion in the Western world and demands more sophisticated technology—something Stratasys can provide.
The Market Is Smaller Than the Dream
Stratasys’s key asset, which has remained intact despite its struggles, is its status as a technological leader and one of the strongest brands in 3D printing. The company was formed through the 2012 merger of the U.S.-based Stratasys, which sold its first printer in the 1990s, and Israeli company Objet, with the combined entity valued at $3 billion at the time.
Over the years, Stratasys acquired several competitors, including MakerBot for $400 million. Today, its most significant remaining competitor is 3D Systems, which has a similar valuation and revenue profile. 3D Systems even attempted to acquire Stratasys in 2023 for $1.2 billion—a reflection of how all the major players now realize that the actual market is much smaller than the grand visions of a decade ago.
