James (Josh Wilson), Securities Litigation Partner, Encourages Investors who Suffer Losses Exceeding $100k in Kornit to Contact Him Directly.
New York, New York–(Newsfile Corp. – April 16, 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 you lost more than $100,000 on Kornit options or stock between February 17, 2020 and July 5, 202022 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson The following are some of the most effective ways to improve your own effectiveness. 877-247-4292 The following are some examples of how to use 212-983-9330 (Ext. 1310). For more information, you can also click on the following link: www.faruqilaw.com/KRNT.
No cost or obligation is imposed on you.
Faruqi & Faruqi is a leading minority and Woman-owned national securities law firm with offices in New York, Pennsylvania, California and Georgia.
Kornit manufactures and designs industrial digital printing solutions. These are used by the textile, apparel and garment industries. The digital inkjet printing technology used by the Company is unique and eco-friendly. It allows them to print on finished garments as well as large rolls of unfinished fabrics.
The Company makes money from selling its digital printing systems, as well as textile dyes and other consumables. Kornit offers equipment services and customer assistance to end users of its printers via customer support contracts. This includes technical support and maintenance. Kornit also expanded its business during the Class Period and began providing software services to customers. This included a suite end-to-end production and fulfillment solutions called KornitX. Through this, the Company offers, among others, automated production systems, workflow and inventory management.
Amazon.com, Inc. is Kornit’s biggest customer. Delta Apparel, Inc., which is a clothing and activewear company, and Fanatics, Inc., which provides licensed sports merchandise, were the other major customers of the Company during this Class Period. Kornit derives more than 60% its revenue from its ten biggest customers. Kornit generates a large portion of its revenues from its ten largest customers. It was therefore important that the Company retain these major customers while continuing to expand its client base to reach its ambitious goal of $1 billion in revenue in 2026.
The complaint alleges, that during the entire Class Period, defendants made numerous false and misleading statements about Kornit and its business. Defendants, in particular, repeatedly praised Kornit’s competitive advantages and assured investors that there was virtually no competition for the Company in the “direct to garment” printing market. The defendants also assured investors there was a strong demand for Kornit’s products and services, including textile inks and digital printing systems. Defendants also assured investors the strong demand of the Company’s services and products would allow Kornit maintain its current customer base, as well as attract new customers. This would reduce the risk of a large portion of the Company’s revenues being concentrated in a few large customers.
In truth, the defendants were aware, or at least recklessly disregarded that the Company’s business of digital printing was plagued by severe problems with quality control and customer service. Kornit lost market share due to these defects and problems, resulting in a drop in revenue. Customers began to go elsewhere for their digital print needs. Kornit’s ordinary shares traded artificially high prices during the Class Period as a result of defendants’ misrepresentations.
Investors started to discover the truth when, on March 28,2022, Delta Apparel (one of Kornit’s largest customers) and Fanatics (another of Kornit’s major clients) announced that for months, they had worked with one Kornit’s competitors to create a new digital print technology that competed directly with Kornit’s services and products. Kornit’s revenue would be affected by the loss of two of its biggest customers.
Kornit, on May 11th, 2022 reported a loss of $5.2M for the first three months of 2022 despite having exceeded analyst expectations. The prior period had seen a profit $5.1M. The Company issued revenue guidance that was below analyst expectations for the second quarter 2022. Kornit’s disappointing guidance was attributed to a slower pace of e-commerce orders. The Company also admitted that it knew for at least two previous quarters that Delta Apparel acquired digital printing system from a Kornit rival. These disclosures led the price of Kornit’s shares to drop by $33 or $18.78.
On July 5, 2022 Kornit announced a significant revenue shortfall in the second quarter 2022. Kornit’s revenue forecast for the second quarter was $56.4 to $59.4 millions, which is well below its previous revenue guidance between $85 and $95 that it provided less than two month earlier. Kornit attributes the significant revenue miss to a “significantly slower pace” of direct-to – garment (DTG) system orders in the 2nd quarter, compared to its previous expectations. The price of Kornit’s shares fell by $8.10 or 25.7% as a result.
The lead plaintiff appointed by the court is the person who has the greatest financial interest in the class and is representative of all class members. He or she is responsible for the management and oversight of the litigation on behalf the putative class. A member of the putative group may ask the Court for the appointment of a lead plaintiff, through an attorney of their choice. They may also choose to do nothing to be absent from the class. The decision of whether or not to be a lead plaintiff does not affect your ability to receive a share of any recovery.
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). Prior results cannot be used to predict or guarantee a similar outcome in a future matter. We are happy to discuss your specific case. All communications will remain confidential.
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