Hagens Berman Sobol Shapiro LLP filed a securities fraud class action against Cogent Communications Holdings (NASDAQ: CCOI) on behalf of investors who purchased shares between February 29, 2024 and May 1, 2026. The lawsuit alleges the company concealed that most of its optical wavelength order backlog was unlikely to convert to paid revenue, leading to a 29 percent stock decline on May 4, 2026.
Hagens Berman filed a securities fraud class action against Cogent Communications (NASDAQ: CCOI) after its stock fell 29 percent on undisclosed backlog issues.
"On wavelength installs, we have seen a variety of customers pushing out their acceptance of wavelengths," CEO and Chairman David Schaeffer said on May 4, 2026, a remark the lawsuit cites as confirmation that the company's reported order backlog was largely illusory.
Cogent's stock fell $6.79, or 29 percent, to close at $16.37 on May 4, 2026, after Schaeffer's comments. The lawsuit, filed August 21 in San Francisco, seeks to represent investors who purchased Cogent common stock between February 29, 2024 and May 1, 2026. The complaint alleges the company overstated customer demand for optical wavelength services, misrepresented its revenue and margin targets, and concealed that its dividend policy was unsustainable.
Investors must file lead plaintiff motions by September 21, 2026. At least four other law firms — Bernstein Liebhard, Kaplan Fox & Kilsheimer, Bronstein Gewirtz & Grossman, and Faruqi & Faruqi — have announced similar actions against Cogent, which faces potential financial liability and regulatory scrutiny from the SEC.
The complaint alleges that throughout the class period, defendants represented that demand for optical wavelengths in Cogent's newly acquired wireline business was exceptionally strong and rapidly growing. However, the order backlog the company publicized was "by and large, illusory," according to the complaint, with most purported orders never converting to paying customers even after the network had been fully repurposed.
Earlier disclosures support the allegations. In Q4 2024 results released February 27, 2025, Cogent reported an annual revenue run rate of only $28 million against a 2028 target of $500 million, and its backlog declined from 3,400 to 2,700 connections sequentially. The stock fell $7.65, or 10 percent, that day.
On May 8, 2025, Cogent admitted that 90 percent of the 3,400 backlog figure quoted with Q3 2024 results "fell out" and that customers were not ready to accept delivery even though Cogent was ready to provision them. The stock fell $3.91, or 7 percent.
In Q2 2025 results released August 7, 2025, Cogent added only 147 net connections during the quarter, far below the claimed 4 percent to 5 percent monthly conversion rate. Schaeffer said the company had installed "several hundred" additional wavelengths to customers who were "surprised" by quick provisioning times and were not able or willing to accept the service. Cogent's gross leverage ratio increased to 8.65x, and the stock fell $8.54, or 19 percent, that day, declining an additional $4.72, or 13 percent, the next day.
The complaint also alleges that Schaeffer's extensive stock pledging activities created a material, undisclosed risk that he would be forced to sell substantial amounts of Cogent stock, further depressing the share price.
The lawsuit adds to mounting legal pressure on Cogent, which has lost more than half its value since early 2025. The September 21 lead plaintiff deadline will determine which firm directs the litigation, and investors will watch for any SEC inquiry into the company's disclosure practices.
This article is for informational purposes only and does not constitute investment advice.
