James Wilson, Securities Litigation Partner James Wilson Encourages Investors who have suffered losses exceeding $100,000 in Kornit to Contact Him Directly To Discuss their Options
New York, New York–(Newsfile Corp. – March 26, 2023) – 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 seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
If your losses exceed $100,000, you should not invest in Kornit stock options or stocks between February 17, 2021 & July 5, 2022 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 Or 212-983-9330 (Ext. 1310). For more information, click here 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 is a manufacturer of industrial digital printing solutions that are used in the apparel, textile and garment industries. The Company’s unique eco-friendly technology allows them to print directly onto both finished garments, as well on large rolls unfinished fabric.
The Company’s revenues come from the sale of its printing systems, as well as textile inks or other consumables for its digital printers. Kornit provides technical support, maintenance and repair services as well as customer assistance to end-users. Kornit also expanded its business during the Class Period and started offering software services to customers. This includes a suite end-to-end fulfillment solutions and production solutions called KornitX. The Company offers, among others, automated production systems, workflow, and inventory management.
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 has a large share of its revenues concentrated with its top customers. It was therefore crucial for the Company to maintain these customers and expand its customer base to reach its ambitious goal of $1 billion revenue by 2026.
According to the complaint, defendants made many materially false or misleading statements and omissions about Kornit’s business operations during the Class Period. Particularly, Defendants repeatedly praised Kornit’s technological advantages and promised investors that they faced little competition in “direct-to–garment” printing. Investors were assured that Kornit’s digital printers and other consumable products such as textile inks are in strong demand. Defendants also stated that the Company offers services to its customers to help manage and maintain their digital printers. Investors were also assured by Defendants that Kornit’s strong demand for its products and services would allow it to retain its existing customers and attract new ones. This would reduce the risk associated with a large portion of its revenues being concentrated in 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 problems and deficiencies led Kornit to lose market share to its competitors. This resulted in a decline in revenue for the Company as customers moved to other digital printing companies. Because of the misrepresentations by Defendants, Kornit’s ordinary shares were traded at artificially high prices throughout the Class Period.
Investors first learned the truth about Kornit on March 28, 2022 when Fanatics (two of Kornit’s most important customers) announced that they had for months collaborated with one Kornit’s principal competitors to create a new digital printing technique that directly competed against Kornit’s products. Kornit would lose revenue from two of the most important customers.
Kornit reported a net profit of $5.1million for the year 2022. However, it reported revenue that was higher than expected. The Company also released revenue guidance for the 2nd quarter of 2022, which was significantly below analysts’ expectations. Kornit said that the Company’s disappointing guidance was due to slowdowns in orders from customers on the ecommerce market. Kornit also acknowledged that the Company knew that Delta Apparel, a competitor to Kornit, had bought digital printing equipment for at most the past two quarters. These disclosures resulted in Kornit shares falling by $18.78 per ounce, or 33%.
Kornit, then, announced on July 5, 2022 that it would have a significant revenue shortfall in the second quarter. Kornit forecasted that revenue for the second quarter would be between $56.4 million and $59.4 millions, which is significantly lower than the $85 million to $95 million revenue guidance the Company gave less than two months ago. Kornit explained that the significant revenue loss was due to “a significantly slower pace in direct-to-garment orders (DTG),” compared to previous expectations. These disclosures led to Kornit shares falling by $8.10 per share or 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 ability to share any recovery is not affected whether you serve as a leading 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). The past results don’t guarantee or predict the outcome of any future matter. We are happy to discuss your individual case. All communications will be treated confidentially.
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