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NSSC.US
id: 1579
Napco Security ($NSSC) Misleading Growth Projections and Demand Forecasting Failures Case
Investors can submit applications for the lead plaintiff role.
E.D. New York
Court1:25-cv-02308
Case number02/05/2024
Class period Start02/03/2025
Class period End06/25/2025
Lead Plaintiff motion deadline- $NSSC investors filed a claim against Napco Security Technologies for overstating hardware demand and falsely promoting its ability to meet aggressive margin and revenue targets.
- After revealing missed sales expectations and walking back its 2026 margin goals, $NSSC dropped 26.6% on February 3, 2025.
Case Details:
Between February 5, 2024 and February 3, 2025, Napco repeatedly promoted strong demand for its hardware products and projected achieving a 45% EBITDA margin by fiscal 2026. Executives cited growing sales, improved manufacturing efficiencies, and strong relationships with distributors, while minimizing the risk of macroeconomic challenges and seasonal inventory fluctuations.
Throughout earnings calls and public filings, Napco reassured investors that locking products and radios were driving higher margins, and that its Dominican Republic factory would support future cost efficiencies. However, the company failed to disclose mounting issues with major distributors, including slowing orders, elevated inventory levels, and weakening demand signals.
On February 3, 2025, Napco reported a 25% year-over-year drop in equipment sales, blamed on reduced orders from two major distributors. Management also admitted that it could no longer confidently meet its fiscal 2026 EBITDA margin goals. $NSSC dropped 26.6% in a single day, falling from $36.70 to $26.93 per share.
Analysts immediately downgraded Napco, citing the company's reliance on last-minute distributor orders, inventory imbalances, and unrealistic prior growth projections.
Based on these events, $NSSC investors filed a claim against Napco Security Technologies, accusing the company of the following:
- It misled investors about demand trends, distributor relationships, and the achievability of 2026 margin goals.
- It concealed slowing sales and overestimated their ability to maintain growth and profitability targets.
Considering all the representations, investors believe Napco overstated its financial outlook and failed to disclose internal weaknesses that would derail its projections.
Case Status
Lead Plaintiff Submission
Alleged Offence
Misleading Statements,
Failure to Disclose,
Omissions
Suspected Party
Directors,
Management
Security Type
Stocks
Trade Direction
Long
Shock Event Date
02/03/2025
Filing date
04/25/2025
Lead Plaintiff Deadline
06/25/2025