Cogent Communications Faces Securities Fraud Class Action
News related to:Cogent Communications Holdings · 2 min read
SAN FRANCISCO, Sept. 7, 2026 /CourierPR/ -- Cogent Communications Holdings, a Nasdaq-listed company, is facing a securities fraud class action lawsuit following a series of revelations about its financial performance and revenue forecasting practices. The lawsuit, filed by the law firm Hagens Berman Sobol Shapiro LLP, alleges that the company misled investors regarding the significance of its optical wavelength "backlog," a key metric used to project future growth.
According to the complaint, Cogent Communications Holdings assured investors that the wavelength backlog was an indicator of the company's expected growth and, by extension, its revenue potential and stock value. However, the lawsuit claims that this metric was illusory and unlikely to convert to actual revenue. The complaint further states that large quantities of orders in the backlog were either unable or unwilling to accept delivery, even if Cogent was capable of provisioning the wavelengths in a timely manner.
Cracks in Cogent's narrative began to emerge in February 2025 when the company reported disappointing fourth-quarter and fiscal year 2024 financial results. On that day, Cogent revealed a 20% sequential decline in its backlog and removed 1,500 orders, many of which were over one year old. This news sent the company’s stock price plummeting. In May 2025, Cogent reported another set of disappointing results for the first quarter of 2025. Management admitted that they had built a funnel of wavelength opportunities with no defined installation window, and as expected, the majority of that funnel had fallen away. The market's response was similar to the February downturn.
Recognizing the loss of investor confidence, Cogent abruptly ceased providing backlog data in February 2026, when it reported its fourth-quarter and fiscal year 2025 results. This decision followed a significant drop in the stock price. By May 2026, Cogent’s Q1 2026 results disappointed again, with revenue and customer connections falling short. Management conceded that some customers were delaying their acceptance of installed wavelengths.
Reed Kathrein, the partner leading the investigation at Hagens Berman Sobol Shapiro LLP, stated, "We are 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."
The lawsuit seeks to represent investors who purchased or otherwise acquired Cogent common stock between February 29, 2024, and May 1, 2026. The firm encourages investors who suffered substantial losses to submit their claims. Persons with knowledge that may assist the investigation are invited to contact the firm's attorneys.
The class period is defined as February 29, 2024, to May 1, 2026, with the lead plaintiff deadline set for September 21, 2026. More information about the case and the firm’s investigation can be found at www.hbsslaw.com/ccoi.