Kornit Shareholder Action Reminder

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 Or 212-983-9330 (Ext. 1310). Click here to get more information. www.faruqilaw.com/KRNT.

There are no fees or obligations.

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 makes revenue through the sales of its printing equipment, textile inks, and other consumable products that can be used in its digital printers. Kornit provides technical support, maintenance and repair services as well as customer assistance to end-users. 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. Other major customers for Kornit in the Class Period include 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’s largest customers account for a significant percentage of its revenue. Therefore, it is crucial that Kornit maintains these major customers and continues to grow its customer base to meet its ambitious goal to generate $1 billion in revenue by 2026.

The complaint claims that Defendants made a number of materially false, misleading and misleading statements and omissions about Kornit’s business operations 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 maintain 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 truth, defendants knew or at the very least, disregarding, that Company’s digital printing business was plagued in quality control and customer service issues. These issues and deficiencies led Kornit’s loss of market share to rivals, which in turn resulted in lower revenue for the Company. Customers went elsewhere to get their digital printing needs. Due to Defendants’ misleading statements, Kornit ordinary stock shares traded at artificially elevated prices during the Class Period.

Investors first learned the truth about Kornit on March 28, 2022 when Fanatics (two of Kornit’s most important customers) announced that for months, Delta Apparel had collaborated closely with one Kornit competitor to create a new digital printing technology directly competing with Kornit’s products. Kornit would lose revenue from two of the most important customers.

Kornit reported a net loss for its first quarter 2022, even though it had reported revenues exceeding expectations. This compares to a profit in the previous year period of $5.1million. The revenue guidance issued by the Company for the second quarter 2022 was also significantly lower than analysts’ expectations. Kornit said that the Company’s disappointing guidance was due to slowdown in orders from customers on the ecommerce market. 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 led to a 33% drop in the Kornit share price by $18.78 per Share.

Kornit, then, announced on July 5, 2022 that it would have a significant revenue shortfall in the second quarter. Kornit forecasted that revenue for the second quarter would be between $56.4 million and $59.4 millions, which is significantly lower than the $85 million to $95 million revenue guidance the Company gave less than two months 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 to Kornit shares falling by $8.10 per share or 25.7%.

The court-appointed lead plaintiff, who has the greatest financial interest in the relief sought for the class and is typical of class members, directs and supervises the litigation on behalf the putative class. 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 be 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.

Attorney Advertising. The law firm responsible for this advertisement is Faruqi & Faruqi, LLP (www.faruqilaw.com). Precedent results are not indicative of a similar outcome in future matters. We would love to have a discussion about your case. All communications will remain confidential.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/156109