3D Systems Corporation shares weakened as financial analysts warn WSB traders of ‘playing with fire’

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Jan 28, 2021
  • 3D Systems Corporation shares have weakened this Thursday
  • If the price falls below the $30 support level, it would be a trend reversal sign
  • 3D Systems will expand its regenerative medicine and bioprinting solutions

3D Systems Corporation (NYSE: DDD) shares extended their correction from the recent highs after many financial analysts warned WSB traders of ‘playing with fire. The current risk/reward ratio is not good for long-term investors, although 3D Systems shares could advance again above $40 resistance.

Fundamental analysis: 3D Systems will expand its regenerative medicine and bioprinting solutions

3D Systems is a company that manufactures and sells 3D printers, 3D printing materials, 3D scanners and offers a 3D printing service. 3D Systems Corporation shares have weakened this Thursday by more than 15% after many financial analysts warned WSB traders of ‘playing with fire.’

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WallStreetBets is an individual message board on the popular internet forum reddit.com on which users discuss potential moves on the financial markets. Users of WallStreetBets usually promote high-risk leveraged trades and treating stocks like 3D Systems.

3D Systems Corporation shares have been moving in an uptrend last several months, but since the beginning of January, the stock price has exploded more than 300%. 3D Systems Corporation shares are also supported by the news that the company will expand its regenerative medicine and bioprinting solutions.

“Over the last years as bioprinting and regenerative medicine have evolved, we’ve seen a growing need to place cells at high-resolution in a nurturing matrix to produce complex tissues. Precise 3D printing with hydrogels, followed by perfusion of cells into the printed scaffold is the best way to achieve this, and we are thankful our work with United Therapeutics has allowed us to advance and perfect this technology,” said 3D Systems  CTO Chuck Hull.

The ongoing euphoria could put amateurs in difficult positions because the company’s fundamentals do not reflect the current share price. We have a bubble in the case of lots of companies, and their performance is out of touch with fundamentals because of short squeezes.

These short squeezes came after WallStreetBets prompted traders to increase many stocks’ prices to force out sellers. It is also important to mention that Berenberg downgraded 3D Systems after its stock advanced more than 300% this month.

Technical analysis: If the price falls below $30, it would probably be a trend reversal sign

There are some apparent risks when it comes to trading this stock currently, and my opinion is that this company is hugely overvalued.

Data source: tradingview.com

The critical support levels are $30 and $20; $40, $45, and $50 represent the resistance levels. If the price jumps again above $40, it would be a signal to trade shares, and the next target could be around $45 or even $50.

On the other side, if the price falls below the $30 support level, it would be a firm “sell” signal and probably a trend reversal sign.

Summary

3D Systems Corporation shares have been moving in an uptrend last several months, but since the beginning of January, the stock price has exploded more than 300%. There is no reasonable explanation for this jump, but some market analysts say that many bullish talks from the popular Reddit WallStreetBets forum influenced this. Many financial analysts and “big” investors names have already warned that “Wallstreetbets” traders could face serious trouble if they continue making speculative trades. 3D Systems Corporation shares extended their correction from the recent highs, and if the price falls below $30, it would probably be a trend reversal sign.

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