Stratasys, MakerBot Being Sued Over Unreliable 3D Printers

Posted by at 11:59 am on July 13, 2015

MakerBot is continuing to supply 3D printers to customers with flaws, even though the company allegedly knows there are issues, a class action lawsuit for shareholders claims. Both MakerBot and parent company Stratasys are accused in the suit of a “fraudulent scheme to artificially inflate” the stock price of Stratasys, by continuing to sell MakerBot’s fifth generation of printers, which is said to have a severely-defective “Smart Extruder,” a crucial component used to apply layers of plastic to create the 3D model itself.

The Smart Extruder is supposed to be an improvement on older extruders used by the companies, due to being swappable and using three sensors to pause a print if there are issues with the plastic filament and to help level the printing surface. In theory, this would mean users would end up with fewer faulty print jobs, saving them money and time.

According to the filing published by Adafruit, it is claimed that, shortly after acquiring MakerBot in 2013, Stratasys then pursued an “aggressive growth strategy” to keep up with demand and to fend off competing 3D printing systems. The fifth generation printers were allegedly rushed to market despite MakerBot’s “knowledge of serious quality and reliability issues plaguing the printers,” including the frequent clogging of the Smart Extruder. Customers then demanded replacements, refunds, and repairs, though the replacements apparently were equally prone to failure.

Makerbot

Despite the problems, the suit claims Stratasys failed to declare to investors the financial issues, keeping its stock price high. In February, a warning was issued for the fourth quarter 2014 results, that it would miss analyst expectations. A conference call the next day revealed the reliability issues, and a goodwill impairment charge of between $100 million and $110 million for the MakerBot acquisition. In April, another warning was issued, advising there was another impairment charge worth double February’s notice.

After both warnings, Stratasys stock plummeted in value. While the company enjoyed a high of $130 per share in 2014, the effects of both warnings in 2015 brought the price down to just $37.45 per share at the end of April.

Neither Stratasys nor MakerBot have publicly commented on the lawsuit.

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