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. – February 22, 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.
You can lose more than $100,000 if you invest in Kornit options or stock between February 17, 2021, and July 5, 2022 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly At 877-247-4292 Oder 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 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 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 receives over 60% of its revenues through its ten largest customers. 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.
The complaint claims that Defendants made a number of materially false and misleading statements about Kornit’s operations and business 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 manage and maintain their digital printers as well as to manage customer workflow. 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 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 switched to digital printing services elsewhere. Because of the misrepresentations by Defendants, Kornit’s ordinary shares were traded at artificially high prices throughout the Class Period.
Investors learned the truth when Fanatics and Delta Apparel, two of Kornit’s largest customers, announced that they had been working with one of Kornit’s main competitors for months to develop a digital printing technology that directly compared to Kornit’s products and services. 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 had reported revenues that were higher than expected. The revenue guidance issued by the Company for the second quarter 2022 was also significantly lower than analysts’ expectations. Kornit blamed the disappointing guidance on a slowdown of orders from customers in e-commerce. 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 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 predicted that second quarter revenue would range from $56.4 million up to $59.4million, well below its previous guidance of between $85million and $95million, which was provided less than two years 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 Kornit’s share price to fall by an additional $8.10/share or 25.7%.
The court-appointed plaintiff lead is the investor who has the largest financial interest. This is an individual who is adequate and typical for class members and who oversees and directs the litigation in favor of the putative classes. 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 would love to have a discussion about your case. All communications will be treated confidentially.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/155819