The legal action, spearheaded by Hagens Berman Sobol Shapiro LLP, alleges that Cogent misrepresented the viability of its wavelength backlog. According to the complaint, management framed these orders as a reliable revenue funnel, despite many customers being unable or unwilling to accept delivery. As the narrative surrounding these metrics began to unravel, Cogent reportedly struggled to convert its backlog into actual earnings, leading to repeated rounds of investor disappointment and subsequent stock price declines.
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Cogent Communications Faces Class Action Over Alleged Revenue Missteps
Investors who held Cogent Communications Holdings stock between February 2024 and May 2026 are now targeting the firm in a class action lawsuit. The litigation centers on claims that the company misled shareholders by inflating the significance of its optical wavelength backlog as a primary indicator of future growth.
Financial reports throughout 2025 and 2026 revealed the depth of the issue. In February 2025, the company disclosed a 20% sequential decline in its backlog and admitted to purging 1,500 stale orders. By February 2026, Cogent abruptly stopped reporting backlog data altogether, signaling a retreat from the transparency investors had previously relied upon. Reed Kathrein, a partner at Hagens Berman, stated that the investigation is focused on whether management intentionally promoted these figures to distort the reality of customer demand. With a lead plaintiff deadline set for September 21, 2026, the firm is currently soliciting information from investors and potential whistleblowers.
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