Stratasys Stock and Its Costly Acquisition Addiction

About 20 years ago, the Financial Accounting Standards Board (FASB) introduced a new concept called goodwill impairment, which despite the name has nothing to do with being charitably challenged (see Jeff Bezos). Just the opposite, in fact. Goodwill in accounting speak refers to the premium one company donates pays for another that is supposed to represent intangible assets like brand name, sex appeal, market potential, etc. The goodwill impairment comes into play when it becomes apparent that part or all of that premium price was pure horse poo. Previously, it had been easier to keep potentially big losses quiet by amortizing the financial hit over decades. 

One of the most famous examples of how this works occurred shortly after this new standard in generally accepted accounting principles (GAAP) went into effect. It involved the infamous 2000 AOL-Time Warner merger where the former actually acquired the latter. The dot-com bubble burst about the time the dust had settled on the deal, revealing that AOL itself had been way overvalued, with the combined company taking a one-time loss, or goodwill impairment, of $59 billion.

So, what does all that have to do with our topic today, the current status of one of the oldest and biggest 3D printing companies in existence today? We’ll get to that shortly.