$CCOI stockholder filed a claim against Cogent for overstating demand for its new optical wavelength business and concealing that most of its order backlog was unlikely to ever convert into paying customers, while also hiding that it lacked the financial capacity to sustain its long-standing dividend.
After Cogent disclosed that customers were pushing out acceptance of wavelength orders, $CCOI fell 29% on May 4, 2026.
$CCOI investors can join this case to be notified about potential recovery.
Between February 29, 2024 and May 1, 2026, Cogent told investors that demand for its new optical wavelength business — built from its 2023 acquisition of T-Mobile's unprofitable wireline network — was strong and rapidly growing. Executives repeatedly cited a large and expanding order "backlog," projected the wavelength business would reach a $500 million annual run rate by mid-2028, and reaffirmed the Company's ability to continue its 13-year streak of quarterly dividend increases.
However, during this period, investors allege Cogent's backlog figures were largely illusory. Cogent allegedly failed to disclose that the vast majority of the orders in its wavelength backlog were unlikely to ever become paying customers, that many backlogged customers were unable or unwilling to accept delivery even when Cogent could provision them, that its revenue and margin targets lacked a reasonable basis, that it did not have the financial capacity to maintain its dividend policy, and that CEO David Schaeffer faced a material risk of being forced to sell large blocks of his pledged Cogent shares.
Then, on February 27, 2025, Cogent reported that its wavelength backlog had declined from 3,400 to 2,700 orders and that its annual revenue run rate was far below target, and $CCOI fell 10%.
Additional revelations followed on May 8, 2025, when Cogent admitted that 90% of the backlog it had touted the prior quarter had "fallen out" as expected.
On August 7 and 8, 2025, when weak installs and sharply higher leverage drove two consecutive declines totaling 32%, compounded by lenders seizing and selling $82.5 million of Schaeffer's pledged shares.
On November 6, 2025, when Cogent cut its quarterly dividend by 98%, ending its 52-quarter growth streak and sending shares down 56% over the following week; and on February 20, 2026, when Cogent stopped disclosing specific backlog figures altogether, sending shares down 29%.
Finally, on May 4, 2026, Cogent disclosed that customers were pushing out acceptance of wavelength orders. $CCOI fell 29%.
Based on these events, $CCOI investors filed a claim against Cogent, alleging the company:
It overstated customer demand and the strength of its optical wavelength order backlog.
It hid that most backlog orders were unlikely to ever convert into paying customers and that its dividend policy was financially unsustainable.
It caused investor losses as the backlog, revenue targets, and dividend were cut in a series of disclosures.
Investors argue Cogent misled the market about customer demand for its wavelength business and the sustainability of its dividend, causing losses when the truth emerged.