Cogent investors face Sept 21 deadline in CCOI securities class action

Cogent Communications Holdings investors have until Sept 21 to seek lead plaintiff status in a securities class action over its optical wavelength backlog disclosures.

"We're focused on whether Cogent and its management intentionally promoted wavelength backlog and funnel as a way to misrepresent both the company's actual ability to convert them to earned revenues and the real company-centric wavelength demand," Reed Kathrein, the Hagens Berman partner leading the firm's investigation, said.

The complaint alleges Cogent's wavelength backlog was largely illusory and unlikely to convert to revenue. Cracks in the narrative emerged Feb 27, 2025, when Cogent reported a 20 percent sequential backlog decline and removed 1,500 orders, many more than a year old. On May 4, 2026, Chief Executive Officer David Schaeffer conceded customers were pushing out wavelength acceptance. Shares fell 29 percent to $16.37 that day.

CCOI shares have dropped more than 80 percent, roughly $69, from a class-period high above $86 in November 2024 to below $17 after May 1, 2026. The case is filed in the US District Court for the District of Columbia.

Cogent's Q2 2026 results, reported Aug 6, showed service revenue of $235.6 million, a sequential decline from Q1 and a year-over-year contraction, with double-digit drops in off-net revenue and declining customer connections. The company acquired the former Sprint wireline business from T-Mobile, a network with negative 80 percent margins and revenue declining more than 10 percent a year, and sought to convert it into a wavelength-optimized platform.

Provisioning windows remained elongated at roughly 90 days and, at times, 120 days or more, according to the complaint. Cogent had expanded wavelength services to more than 880 data centers across North America, but wavelength revenue rose just $200,000 from Q4 2024 to Q1 2025. Management said it had capacity to provision 500 orders a month but expected to convert only 5 percent of its 3,400-order backlog. Wavelength revenue later climbed to $10.2 million in Q3 2025, $12.1 million in Q4 2025 and $13.6 million in Q1 2026, while customer connections rose from 1,750 to 2,064 to 2,263 over the same stretch.

Cogent stopped providing backlog data on Feb 20, 2026, when it reported Q4 and full-year 2025 results, sending shares down 29 percent. On Nov 6, 2025, the company cut its quarterly dividend 98 percent to $0.02 from $1.015, ending 52 straight quarters of increases; shares fell 56 percent over the following week. Levi & Korsinsky, Kaplan Fox & Kilsheimer and Pomerantz are among other firms representing investors in the action.

The Sept 21 deadline determines who leads the class and shapes settlement leverage. Investors who bought during the class period and sold at a loss may still recover, regardless of whether they hold the shares.

This article is for informational purposes only and does not constitute investment advice.