KORNIT DEADLINE ALERT: Bragar Eagel & Squire, P.C. Reminds Investors that a Class Action Lawsuit Has Been Filed Against Kornit Digital Ltd. and Encourages Investors to Contact the Firm – Kornit Digital (NASDAQ:KRNT)
Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, reminds investors that a class action lawsuit has been filed against Kornit Digital Ltd. (“Kornit” or the “Company”) KRNT The lawsuit will be filed in the United States District Court for the District of New Jersey, on behalf of all individuals and entities that purchased or acquired Kornit Securities between February 17, 2020 and July 5, 2020 inclusively (the “Class Period”) Investors can apply to the Court until April 17, 2020 to be appointed lead plaintiff.
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This securities class-action is brought by all persons and entities who purchased or acquired Kornit ordinary share between February 17, 2020 and July 5, 2020, inclusively (the “Class Period”) The claims asserted in this action are brought against Kornit as well some of the Company’s former and current senior executives (“Defendants”) under Sections 10b and 20a of the Securities Exchange Act of 1939 (the “Exchange Act”) along with Rule 10b-5.
Kornit manufactures and designs industrial digital printing technology for the apparel, textile and apparel industries. Digital inkjet printers from the Company enable users to print direct-to garment (“DTG”) as well as direct-to fabric (“DTF”). In DTG printing images and designs can be printed directly onto textiles, such as apparel and clothing. In DTF printing, large rolls of fabric pass through wide inkjet printers that print images and designs directly onto swaths of fabric that are then cut and sewn into a product, and can be used in the fashion and home décor industries. Kornit sells textile inks as well as other consumables to be used with its digital printers. Kornit offers customer assistance, equipment services, and technical support for its printers through customer support contracts.
During the class period, the company began to offer software services, such as a complete suite of fulfillment and production solutions called KornitX. Through this, the company provides automated production systems, workflow management, and inventory management.
Amazon.com, Inc., a multinational ecommerce company, is the Company’s biggest customer. Delta Apparel, Inc. (Delta Apparel), a leading provider activewear and lifestyle clothing products, and Fanatics, Inc. (Fanatics), a global digital platform and leading supplier of licensed sports merchandise, were among the largest Kornit customers during the class period. Kornit derives more than 60% its revenue from its top ten customers. Kornit’s goal to “become a $1 billion revenue Company in 2026” was based on the ambitious goal to keep these major customers and continue to grow their customer base.
Throughout Class Period, Kornit promoted the supposed competitive advantages of its technology. It assured investors that there was virtually no significant competition in the market for “direct-to garment” printing. The Company stated that there was a strong demand for digital printing systems and consumables such as textile dyes. They also claimed to provide services to its customers in order to maintain, manage and manage their digital printers as well as manage their workflow. Kornit also assured investors that a purportedly high demand for its products and services will enable the Company to retain its existing client base and attract new clients, limiting the risk of a large portion of revenues being concentrated in a few large customers.
These statements, and many others throughout the Class Period, were false. Kornit’s senior executives and management knew or, at the very least, recklessly ignored, that their digital printing business suffered from severe quality control issues and poor customer service. Kornit lost market share due to these issues and deficiencies, which led to the Company losing revenue. Customers began to go elsewhere for their digital print needs. These misrepresentations caused Kornit’s ordinary shares to trade at artificially inflated prices during the Class Period.
Investors began to learn the truth on 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 products and services Kornit offered. Delta Apparel announced that the new technology had been installed in four of their existing digital print shops and plans to expand. Delta Apparel’s and Fanatics’ use of this new technology reflects the dissatisfaction Kornit customers have with its product quality and service. This means that Kornit will likely lose two of its biggest customers.
Kornit announced a net loss for the first quarter 2022 on May 11, 2022. This was despite exceeding expectations in terms of revenue. The Company issued revenue guidance that was well below analyst expectations for the second quarter 2022. Kornit’s disappointing guidance was attributed to a slower pace of orders coming in from its customers in the Company’s ecommerce segment. Kornit also acknowledged that for the past two quarters it had known that Delta Apparel was one of Kornit’s largest customers. They purchased digital printing equipment from a Kornit rival. These disclosures caused the price of Kornit’s ordinary shares to drop by $18.78 or 33.3%.
Kornit then announced on July 5th, 2022 after the close of the stock market, that the company would have a substantial revenue shortfall for the second half of 2022. Kornit had forecast revenue in the second-quarter range of $56.4 million – $59.4million, which was far less than the previous guidance provided by the Company in May of 2022, between $85 and $95million. Kornit attributes the significant revenue miss to a “significantly slower pace” of direct-to -garment systems orders during the second quarter, compared to its previous expectations. These disclosures caused the price of Kornit’s ordinary shares to drop by $8.10 or 25.7%.
Plaintiff and other members of the Class have suffered substantial losses and damages as a result of the Defendants’ wrongful acts and/or omissions and the precipitous drop in the value of the Company’s shares.
If you purchased or otherwise acquired Kornit shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at [email protected], telephone at (212) 355-4648, or by filling out this contact form. No cost or obligation is imposed on you.
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