Kornit Shareholder Action Reminder

If your losses exceed $100,000, you should not invest in Kornit stock options or stocks between February 17, 2021 & 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.

There are no costs 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 develops and manufactures digital printing solutions for textile, garment, and apparel 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. 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 receives over 60% of its revenues through its ten largest customers. Kornit has a large share of its revenues concentrated with its top customers. It was therefore crucial for the Company to maintain these customers and expand its customer base to reach its ambitious goal of $1 billion revenue by 2026.

The complaint claims that Defendants made a number of materially false and misleading statements regarding Kornit’s operations and business during the Class Period. Particularly, the defendants repeatedly praised Kornit’s technological advantages and assured investors that they faced little competition in “direct-to–garment” printing. Investors were assured that Kornit’s digital printing technology and consumable products such as textile dyes, are in strong demand. Defendants also stated that the Company offers services to its customers to manage and maintain their digital printers as well as to manage customer workflows. Investors were also assured by Defendants that Kornit’s strong demand for its products and services would allow it to retain its existing customers and attract new ones. This would reduce the risk associated with a large portion of its revenues being concentrated in a few large customers.

In truth, 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 went to other places to print their digital printing requirements. Because of the misrepresentations by Defendants, Kornit’s ordinary shares were traded at artificially high prices throughout 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 they had for months collaborated with one Kornit’s principal competitors to create a new digital printing technique that directly competes 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 slowdowns 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 resulted in Kornit shares falling by $18.78 per ounce, or 33%.

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 said that revenue fell due to “a slower pace of direct to-garment (DTG), systems orders in the second quarter than we had anticipated.” 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 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.

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