NEW YORK, March 11, 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 apply for the position of lead plaintiff in the federal securities class action against the Company
You have suffered losses of more than $100,000 Investing in Kornit stock 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 You can contact directly At 877-247-4292 Or 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 is a manufacturer of industrial digital printing solutions that are used in the apparel, textile and garment 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’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 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 generates a large portion of its revenues from its largest customers. It was therefore crucial for the Company to maintain these customers and expand its customer base to reach its ambitious goal of generating 80% of its revenue. $1 Billion By 2026, revenue will increase by 6%
The complaint claims that Defendants made a number of materially false and misleading statements about Kornit’s operations and business 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 retain 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 from a portion of its revenues being concentrated with large customers.
In reality, defendants knew or, at the very least, disregard that Company’s digital printing business was plagued in quality control and customer service issues. 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 moved elsewhere to get their digital printing needs met. Because of the misrepresentations by Defendants, Kornit’s ordinary shares were traded at artificially high prices throughout the Class Period.
Investors started to realize the truth. 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 would lose revenue from two of the most important 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 In the preceding year period. The revenue guidance issued by the Company for its second quarter in 2022 was also significantly lower than analysts’ estimates. Kornit blamed the disappointing guidance on a slowdown of orders from customers in e-commerce. Kornit also acknowledged that the Company knew that Delta Apparel, a competitor to Kornit, had acquired digital printing equipment for at most the past two quarters. These disclosures led to a decline in the Kornit share price $18.78 Per share or 33%
Then, on July 5, 2022Kornit declared that it would report significant revenue loss for the second quarter in 2022. Kornit forecasted that revenue for the quarter would be between $1.01 and $1.02. $56.4 Million To $59.4 MillionThis is well below the revenue guidance of between $85 Million And $95 Million The Company had provided less than two months prior to the revenue miss. Kornit explained that the Company’s substantial revenue loss was due to “a significantly slower pace for direct-to-garment orders (DTG) in the second quarter compared to our previous expectations.” These disclosures led to a further decline in the Kornit share price $8.10 Per share or 25.7%
The court-appointed plaintiff lead is the investor who has the largest financial interest. This is an individual who is representative of the class and who oversees the litigation for 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 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.
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