NEW YORK, March 18, 2023 /PRNewswire/ — Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Kornit Digital Ltd. (“Kornit ” or the “Company”) (NASDAQ: KRNT) and reminds investors of the April 17, 2023 deadline to become the lead plaintiff in a federal class action for securities against the Company
You suffered losses exceeding $100,000 Investing in Kornit stock options or stock between February 17, 2021 And July 5, 2022and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson Direct At 877-247-4292 Oder 212-983-9330 (Ext. 1310). Click here to get more information. www.faruqilaw.com/KRNT.
There is no obligation or cost to you.
Faruqi & Faruqi is a leading minority And Woman-owned national securities law firm with offices in New York, Pennsylvania, California and Georgia.
Kornit develops and manufactures digital printing solutions for textile, garment, and apparel industries. The unique eco-friendly technology used by Kornit’s digital inkjet printers allows them to print directly on finished garments as well as large rolls of unfinished material.
The Company makes revenue through the sales of its printing equipment, textile inks, and other consumable products that can be used in its digital printers. Kornit offers customer assistance and other services to its end-users. These include technical support, maintenance, repair, and customer support contracts. Kornit began offering software services during the Class Period. These include a suite called KornitX that provides end-to–end fulfillment and production solutions.
Amazon.com, Inc. is Kornit’s largest customer. The Company had other major customers during the Class period, including Delta Apparel, Inc. (aka Delta Apparel) and Fanatics, Inc. (aka Fanatics), which are both apparel and activewear brands. Kornit’s ten largest customers account for more than 60% of its revenue. Kornit’s largest customers account for a large percentage of its revenues. Therefore, it was essential that Kornit maintains these major customers and continues to grow its customer base to meet its ambitious goal. $1 Billion By 2026, revenue will increase by 6%
The complaint claims that Defendants made a number of materially false, misleading and inaccurate statements and omissions about Kornit’s business operations during the Class Period. In particular, the Defendants repeated the Company’s competitive advantages and assured investors that there was virtually no competition in the “direct to-garment” printing market. Investors were also assured by Defendants that Kornit’s digital printing system and consumable products (such as textile inks) are in high demand. They also provided services to customers to help them maintain and manage their digital printers and manage customer workflows. Investors were further assured by the defendants that Kornit would be able to maintain its existing customer base as well as attract new customers due to the high demand for its products. They also stated that Kornit would not have significant risks associated with large portions of its revenues being concentrated within a few large customers.
In reality, the Defendants knew or at least recklessly ignored that the Company’s digital printer business was plagued with quality control issues and poor customer service. These issues and deficiencies caused Kornit’s market share to be ceded to competitors. In turn, this led to a decrease of revenue for the Company, as customers chose to print digitally elsewhere. Due to Defendants’ misleading statements, Kornit ordinary stock shares traded at artificially elevated prices during the Class Period.
The truth was finally revealed to investors March 28, 2022, when Delta Apparel and Fanatics—two of Kornit’s major customers—announced that for months they had collaborated with one of Kornit’s principal competitors to develop a new digital printing technology that directly competed with Kornit’s products and services. Kornit was likely to lose revenue from these two customers.
On May 11, 2022Kornit reported an unexpected net loss of $2.2 million despite reporting revenues exceeding expectations. $5.2 million For the first quarter in 2022, it was a profit of $5.1 Million The prior year period. Revenue guidance was also issued by the Company for the second quarter 2022, which was significantly lower than analysts’ expectations. Kornit said that the Company’s disappointing guidance was due to slowdowns in orders from customers on the ecommerce market. The Company also admitted that it knew for at least two quarters that Delta Apparel had purchased digital printing systems from Kornit competitors. These disclosures caused Kornit shares’ price to fall by $18.78 Each share is 33%
Then, on July 5, 2022Kornit stated that it expected to report a significant revenue gap for the second quarter 2022. Kornit expects revenue to reach between $200,000 and $35,000 for the second quarter. $56.4 Million To $59.4 MillionThis is significantly lower than the previous revenue guidance of between $85 million And $95 million The Company had not provided the Company with a report for two months before. Kornit stated that the significant revenue decline was due to “a substantially slower pace of direct to-garment (DTG), systems orders in quarter two than our expectations.” These disclosures led to a further decline in the Kornit share price $8.10 Each share is 25.7%
The court-appointed lead plaintiff, who has the greatest financial interest in the relief sought for the class and is typical of class members, directs and supervises the litigation on behalf the putative class. Any member or potential class member may petition the Court to be appointed lead plaintiff by counsel of their choosing, or they may remain absent and choose not to act. Your right to share in any recovery does not change by whether you are chosen to serve as the lead plaintiff.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Kornit’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
Attorney Advertising. The law firm responsible for this advertisement is Faruqi & Faruqi, LLP (www.faruqilaw.com). Precedent results are not indicative of a similar outcome in future matters. We are happy to discuss your individual case. All communications will be treated confidentially.
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