Stockholders have filed a class action lawsuit against 3D Systems of Rock Hill, alleging the company intentionally deceived investors by making false and misleading statements they used to make financial decisions.
Some stockholders, according to federal court filings, lost millions of dollars in stock value when 3D Systems announced twice in 2014 that its quarterly earnings were below analysts’ expectations, causing 3D Systems’ stock prices to plummet.
Officials from 3D Systems said Wednesday the company does not comment on pending litigation and that the company “believes the claims alleged in the putative stockholder class action lawsuit and the related derivative lawsuit are without merit and we intend to defend the company and its officers and directors vigorously.”
The class action lawsuit names the company as well as Abraham Reichental, the company’s president and chief executive officer, and Damon Gregoire, the company’s executive vice president for mergers and acquisitions, as defendants.
The suit was filed in the Rock Hill division of the federal court for South Carolina.
3D Systems, which has been an industry leader in developing 3-D technology and manufacturing 3-D printers, is based in Rock Hill.
Multiple plaintiffs are seeking to become the lead plaintiff in the consolidated case that is before Judge Mary G. Lewis.
The plaintiffs all make similar arguments: Between Oct. 29, 2013, and Oct. 22, 2014, 3D Systems drove up the stock price by issuing false and misleading statements concerning the company’s ability to increase the capacity of its metal printing business, about the demand for its consumer products, the value of the companies it had acquired, and its expected earnings.
On Oct. 29, 2013, Reichental said 3D Systems would triple its manufacturing capacity in the next year and accelerate development of additional 3-D printers that use metals. About four months later, Reichental said the company would quadruple its direct metal printing sales in the next 12 to 18 months.
When 3D Systems issued its second quarter report in July 2014, it missed analysts’ expectations, citing delays in the rollout of new products. The company’s share price fell nearly 11 percent as a result of the report. 3D Systems stock price then was $51.33.
When 3D Systems issued its third-quarter report in October 2014, the company said manufacturing constraints would hamper its third-quarter performance and that it expected revenues between $164 million and $169 million. Analysts were anticipating revenues to be about $182 million.
The company’s share price plunged 15.5 percent after the announcement to close at $36.67.
Kris Carroll of Carroll Financial of Charlotte said when stocks dramatically lose value there are frequently class action suits. He said the reaction to the suits, however, is “not as high as you might think because the only people who can sell are those who own the stock.”
Among those filing petitions to be lead plaintiff are Enormous Luck Ltd. of the Bahamas which lost $2.8 million and the 3D Investors Group, which includes the Bristol, Conn., pension fund, which lost $2 million.
The price of 3D Systems stock has continued to fall. The price Wednesday was $12.57, up from a 52-week low of $11.66. The 52-week high was $54.24.