The complaint alleges that throughout the class period, Defendants touted the company’s competitive advantage from its technology and lack of competition in the direct-to-garment printing market which would allow Kornit to maintain its existing customer base and attract new customers despite quality control and customer service issues at its digital printing business.
On March 28, 2022, key Kornit clients Delta Apparel and Fanatics announced a monthslong collaboration with a Kornit competitor to develop a competing digital printing technology.
On May 11, 2022, Kornit reported disappointing quarterly financial results for Q1 2022, issued revenue guidance significantly below expectations, and admitted prior knowledge of Delta Apparel acquiring digital printing systems from a competitor. On this news, the price of Kornit Digital stock dropped more than 30%.
Then on July 5, 2022, Kornit announced it would report a significant revenue shortfall for Q2 2022, well below the revenue guidance issued only two months earlier. On this news, the price of Kornit Digital stock dropped more than 25%.
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