Though we’re currently in the process of writing a comprehensive review of 3D printing stocks, it can be said that, in terms of current share price, most of them are not doing so hot. While a perfect time to buy for many interested in the long term success of the 3D printing industry, it is not a perfect time for companies faced with shareholders who are, well, disappointed, to say the least.
This Tuesday, Stratasys announced that their Q4 earnings were going to fall short of their previous forecast and that their Q5 estimates would be lower than expected, as well. In turn, the law firm Robbins, Geller and Rubin slapped the industry leader with a lawsuit, alleging that the company had inflated its 2014 projections and violated rules imposed by the Security and Exchange Commission.
In Novemeber of last year, Stratasys anticipated a $31.6-to-$24.4 million loss, not good, but definitely better than what they reported on Tuesday. The company instead announced a whopping anticipated loss of $116 million to $129 million (or $2.32 to $2.58 a share), driving Stratasys’ stock price down by 30% that morning. That extra $100 million wing-wangs comes from an “impairment charge” the company is facing due to “less predictable sales patterns” of MakerBot products through their Home Depot, Staples, and Sam’s Club distribution channels. Adafruit has a great breakdown of what all of this impairment charge business is on their blog, but, more or less, the anticipated value of the MakerBot brand is less than the $493.7 million Stratasys paid for it when they acquired the desktop 3D printer manufacturer in 2013.
In response, Robbins, Geller and Rubin filed a lawsuit, on behalf of those who purchased Stratasys stock between May 9, 2014 and February 2, 2015, against Stratasys for violations of the Securities Exchange Act of 1934, a massive law that established the SEC and, according to Cornell University Law School Legal Information Institute, “is designed to force companies to make public information that investors would find pertinent to making investment decision.”
In court documents (.PDF) filed February 5th, the law firm explains, “These claims are asserted against Stratasys and certain of its officers and/or directors who made materially false and misleading statements during the Class Period in press releases, analyst conference calls, and SEC filings.” The documents go on to argue that the company was “highly motivated to conceal the substantial problems with the Company’s business, outlook, and MakerBot products, and, in turn, artificially inflate the price of Stratasys stock.”
So far, Stratasys has made no official comment about the suit, but, as investors reacted negatively earlier this week, Stratasys co-founder and Chairman, Scott Crump, issued the following statement, “Our growth in fiscal 2014 was impressive, we experienced estimated revenue growth of 54 percent compared to fiscal 2013, including organic revenue growth of 31 percent. Stratasys’ prospects for 2015 and beyond are strong. We continue to see additive manufacturing being used to transform manufacturing processes across a wide range of sectors, augmenting our leading position in prototyping applications. We are also excited about our opportunity to build upon MakerBot’s leading position in desktop 3-D printing.”
After the massive drop in price on Tuesday (trading as low as $51.75), the stock price has begun to rise slowly, now at about $61 per share at the time of this writing. The company is being rated as a buy by Gabelli and Co., but four other analysts have downgraded the stock’s rating from buy to hold.
Meanwhile, some MakerBot purchasers are in the process of organizing a lawsuit against the brand for their faulty MakerBot 5th Generation Replicator Smart Extruders (which the company has claimed to have since improved). A number of 5th Gen users have taken to Change.org with a petition to issue a product recall. The petition’s author believes that, if there are enough customers onboard, they may be able to file a class action lawsuit, saying in an update:
One proposed avenue I have researched is a potential class action which a legal firm will run for us. At the present, with more support and signatures it may be possible with to get a legal firm to take on our complaint against Makerbot, but I need your support by getting as many signatures as possible (and possibly at a later date getting details of the problems which you have had and associated details).
The MakerBot brand may have fallen out of favor with the Maker community, but its industrial parent company still boasts a massive materials portfolio, impressive 3D printing systems, strong commercial partners, and a large prototyping and manufacturing division. What the future holds, however, is, as Oedipus so clearly symbolized, unknown to the likes of us mortals. Whether or not the Oracle of Delphi would have divined this series of events as a karmic consequence for Stratasys’ lawsuit against Afinia is also best left to the Ancient Greeks. All we can do now is cast the bones and listen to the wind.
That is, unless you’re someone who purchased SSYS between May 9, 2014 and February 2, 2015. Then, you can join the suit here. Other options open to humanity for righting perceived wrongs include – aside from throwing bones and relying on prophets – protests, revolutions, online petitions, or polite correspondence with political and business leaders. Or you can simply become your own prophet by, like the Oracle at Delphi, “chewing bay leaves and drinking water from the sacred spring Kassotida.”