Why We’re Long Protolabs Stock But Not Shapeways Stock

It’s bad enough that the market seems to be completely ignoring The Rona which is decimating the trillion-dollar travel industry and – one could argue – has caused the price of agricultural products to skyrocket. But another lingering effect of the pandemic is that it gives everyone a pretty good excuse. Just listen to the outrage mafia on Twitter talking about how much more “exhausted” they are than usual. Everyone can play that game, and so can companies.

If you’re a company that was expecting a bad 2020 even before The Rona showed up, you’re loving life. For every stock we hold, it’s easy to give them a pass if revenue growth slowed during 2020. For many, it did, and for some, it exposed how fragile their business models are. We don’t mind seeing revenues dip during a crisis, but we’d like to see the basic financials recover like this company has:

In the above chart, revenue growth has resumed while costs are being reigned in because uncertain times are upon us.

But what if 2019 was a year when revenue growth slowed? Should a company then be given a pass on two years of declining growth – 2019 and 2020? That’s one question we’re trying to answer today. The below chart happens to be a company we’re long and recently added to a bit – Protolabs (