In the article, Colberg accuses CEO Kent Rockwell of mismanaging the firm and using it as his own “piggy-bank”. According to the report, within the company’s S1 registration papers lies a share sale plan that will enrich Rockwell more than the company during its next share offering. “The chief executive and his interests get far more money under this deal than the company itself”, explains Colberg.
In fact, if the stock offering goes according to plan, ExOne’s CEO stands to make an estimated $100 million dollars versus the company’s $72 million. When insiders sell major blocks of shares, investors often take that as a sign of clouds on the company’s horizon.
While the dealings of ExOne’s CEO have caused quite an uproar, what’s more damning is Street Sweepers assessment that the company’s technology is inferior to its competitors. Although many investors jumped on the ExOne stock when it went public at $18, some ExOne machine owners have expressed dissatisfaction with their printers. An exchange captured in the Street Sweeper article highlighted this problem:
One of our sources asked a plant manager, “Do you ever use [your ExOne]?”
“No. I can make the part faster on my own,” said the manager.
Although one company’s dissatisfaction hardly proves a case, CEO Rockwell has mentioned that his company’s 17 year old technology needs some innovation. In a recent earnings call Rockwell said “Obviously, we have to enhance our machine technology”. ExOne President David Burns has also admitted that some customers aren’t finding their machines as useful as hoped, saying, “we are finding customers that are struggling a little bit to find ways to implement what we can sell them”.
For now, despite all of its warts, ExOne continues to satisfy investors. At its close yesterday ExOne was trading at $71.27. Whether the ExOne executives are selling at a peak in the price is yet to be seen.
Image Courtesy of ExOne
Source: Street Sweeper