James Wilson (Securities Litigation Partner) Encourages Kornit Investors 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.
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.
It is free and you are under no obligation.
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 produces industrial digital printing solutions that are suitable for garment, apparel and textile industries. Digital inkjet printers from Kornit use an eco-friendly technique that allows them to print on finished garments as well as large rolls of unfinished material.
Revenue is generated by the sale of printing systems, textile inks, and other consumables for its digital printers. Kornit offers customer service and technical support to its end-users. This includes repair, maintenance and technical support. Kornit began to offer software services during the Class period. These include a complete suite of production and fulfillment solutions, called KornitX. It provides automated workflows and inventory management, as well as production and workflow systems.
Amazon.com, Inc., is Kornit’s largest client. Other major customers for Kornit in the Class Period include Delta Apparel, Inc., an apparel and activewear company (“Delta Apparel”), Fanatics, Inc. (“Fanatics”), which provides licensed sports merchandise. Kornit receives over 60% of its revenue from the ten largest customers. Kornit generates a substantial portion of its revenue from its largest customers. Therefore, it is crucial that Kornit maintains these major customers in order to meet its ambitious goal of $1 billion in revenues by 2026.
The complaint claims that Defendants have made numerous misleading and materially false 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 print systems, consumables (such as inks for textiles), and the Company’s services for maintaining and managing its digital printers as well as managing customer workflows are in high demand. Investors were further assured that Kornit would be able to retain its current customer base as well as attract new ones by the Company’s high demand for its products and services. It would also limit the potential risks of a large portion of its revenue being concentrated with only a handful of large customers.
The truth is that Defendants either knew or recklessly disregard the fact that Company’s digital printing business had severe quality control and customer service issues. These issues and deficiencies caused Kornit a loss of market share, which in turn led to lower revenue. Customers went to digital printers that were more reliable. Due to Defendants’ misrepresentations Kornit ordinary stock shares trade at artificially inflated prices all through the Class Period.
The truth was revealed to investors by Delta Apparel, Fanatics and Fanatics on March 28th 2022. They announced that they had been working with one of Kornit’s main competitors for several months to create a digital printing technology directly competing with Kornit’s. Kornit could lose revenues from its two most valuable customers.
Kornit, which reported revenues exceeding expectations on May 11, 2022, posted a net profit of $5.2million for the first quarter 2022. That compares to an operating profit of $5.1million in the preceding year. Revenue guidance was also released by the Company for 2022, which was considerably below analyst expectations. Kornit said that the Company’s disappointing guidance was due to slowdowns in order from customers on the ecommerce market. The Company also admitted that it knew for the past two quarters that Delta Apparel purchased digital printing systems from Kornit competitors. The price of Kornit shares fell by $18.78 per Share, or 33% due to these disclosures
Kornit, then, announced on July 5, 2022 that it was going to report significant revenue loss for its second quarter in 2022. Kornit forecasted that revenue would range from $56.4 million-$59.4 million for the second quarter, which is significantly lower than the $85 million-$95 million revenue guidance the Company had provided two months ago. Kornit said that revenue fell due to “a slower pace for direct-to garment (DTG) system orders than we had anticipated.” The price of Kornit shares fell by $8.10 or 25% due to these disclosures.
The lead plaintiff appointed by the court is an investor who has the greatest financial interest in the relief requested by the class. He or she is representative of all class members and directs and monitors the litigation. A member of the putative group may request the Court to appoint a lead plaintiff by contacting counsel of their choosing, or they may opt to remain absent and do nothing. Your right to participate in any recovery does not change by whether you are chosen to be a 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 future outcome. Your case will be discussed with us. All communication will be kept confidential.
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