A securities fraud class action has been filed against Cogent Communications Holdings (NASDAQ: CCOI) by Hagens Berman Sobol Shapiro LLP, alleging the company misrepresented its optical wavelength backlog and customer demand. The lawsuit covers investors who purchased shares between Feb. 29, 2024 and May 1, 2026, following an approximately 29 percent stock decline.
Hagens Berman filed a securities class action against Cogent Communications Holdings after the stock fell approximately 29 percent on undisclosed wavelength backlog issues.
"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 investigation, said.
The lawsuit seeks to represent investors who purchased Cogent common stock between Feb. 29, 2024 and May 1, 2026. The complaint alleges Cogent's wavelength backlog was an illusory metric unlikely to convert to revenue, and that many customers in the backlog were unable or unwilling to accept delivery even when the company could provision wavelengths in a timely manner. As a result, the company materially misrepresented customer demand for its optical wavelength services and the nature of its backlog.
Cracks in the narrative emerged on Feb. 27, 2025, when Cogent reported disappointing Q4 and full-year 2024 results and revealed a 20 percent sequential decline in its backlog, removing 1,500 orders because many were over one year old. The market sent the stock steeply lower. On May 8, 2025, the company reported disappointing Q1 2025 results and said it had more installation capacity than orders ready to be installed. Management said, "we built a funnel of wavelength opportunities with no defined installation window, and as expected, the majority of that funnel fell out." The market's reaction was similar.
In apparent recognition that investors had lost faith in the wavelength backlog story, Cogent abruptly ceased providing backlog data on Feb. 20, 2026, when it reported Q4 and full-year 2025 results. The market again sent shares steeply lower. On May 4, 2026, Cogent reported Q1 2026 results that again disappointed on wavelength revenue and customer connections. Management conceded that customers were "pushing out their acceptance" and that the company provisioned more wavelengths in the quarter than the previous one, but customers did not accept them.
The lead plaintiff deadline is Sept. 21, 2026. Hagens Berman has secured more than $2.9 billion in investor recoveries across its practice. The firm also noted that whistleblowers with non-public information about Cogent could qualify for SEC rewards of up to 30 percent of any successful recovery.
The litigation compounds pressure on Cogent as investors reassess whether the wavelength backlog story reflected genuine demand. The next milestone is the lead plaintiff deadline on Sept. 21, 2026, which will determine who steers the case.
This article is for informational purposes only and does not constitute investment advice.
