NEW YORK, Feb. 22, 2023 /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of Kornit Digital Ltd. ("Kornit" or the "Company") (NASDAQ: KRNT). Such investors are advised to contact Robert S. Willoughby at newaction@pomlaw.com or 888-476-6529, ext. 7980.
The investigation concerns whether Kornit and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.
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On March 28, 2022, 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 revealed that it had already installed this new technology in four of its existing digital print facilities and had plans to expand further. The utilization of this new, competing technology by Delta Apparel and Fanatics reflected widespread dissatisfaction of Kornit's major customers with the Company's product quality and customer service and meant that Kornit would likely lose revenue from two of its most important customers.
Then, on May 11, 2022, despite reporting revenues that exceeded expectations, Kornit reported a net loss of $5.2 million for the first quarter of 2022, compared to a profit of $5.1 million in the prior year period. The Company also issued revenue guidance for the second quarter of 2022 that was significantly below analysts' expectations. Kornit attributed its disappointing guidance to a slowdown in orders from the Company's customers in the e-commerce segment. In addition, the Company admitted that, for at least the previous two quarters, Kornit knew that one of its largest customers, Delta Apparel, had acquired digital printing systems from a Kornit competitor.
On this news, Kornit's stock price fell $18.78 per share, or 33.3%, to close at $37.63 per share on May 11, 2022.
Then, on July 5, 2022, after the market closed, Kornit disclosed that it would report a sizeable shortfall in revenue for the second quarter of 2022. Specifically, Kornit expected revenue for the second quarter to be in the range of $56.4 million to $59.4 million, far short of the previous revenue guidance of between $85 million and $95 million that the Company provided less than two months earlier, in May 2022. Kornit attributed the substantial revenue miss to "a significantly slower pace of direct-to-garment (DTG) systems orders in the second quarter as compared to our prior expectations."
On this news, Kornit's stock price fell $8.10 per share, or 25.7%, to close at $23.46 per share on July 6, 2022.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, London, and Paris is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
CONTACT:
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com
888-476-6529 ext. 7980
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SOURCE Pomerantz LLP
