A securities class action has been filed in the USDC — S.D.N.Y. against Extreme Networks, Inc. (EXTR) (“Extreme” or the “Company”), on behalf of all persons or entities that purchased or otherwise acquired Extreme common stock between July 27, 2022 and January 30, 2024, both dates inclusive (the “Class Period”).
Extreme is a global provider of cloud-based computer networking equipment and related services and support. Among other products, Extreme designs, develops, and manufactures wired, wireless, and software-defined wide area-network (“SD-WAN”) infrastructure equipment. In or around August 2019, Extreme shifted its focus to cloud-based networking. Extreme’s transition to cloud-based networking solutions appeared to begin successfully, with analyst firm Omdia naming Extreme the fastest-growing vendor in Omdia’s 2020 Cloud-Managed Networking Market Report.
The claim arises on January 31, 2024, when Extreme reported disappointing financial results and operational trends for 2Q24.
The complaint alleges that defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that, among other things, Extreme Networks was suffering from adverse client demand trends as its clients had ordered more product from Extreme Networks than needed in the wake of the COVID-19 pandemic and that Extreme Networks was increasingly offsetting these adverse organic demand trends with the fulfillment of backlog orders in a manner that materially exceeded the proportion represented to investors. The Action further alleges that on January 25, 2023, Extreme Networks announced the resignation of defendant Rémi Thomas, Extreme Networks’ CFO, and also revealed that compared to the first quarter of 2023, Extreme Networks’ backlog had fallen to $542 million, its Product Book to Bill Ratio had fallen from 1.3x to 0.9x, and its Service Book to Bill Ratio had fallen from 1.4x to 1.2x. On this news, Extreme Networks’ share price declined by nearly 15%, according to the complaint.
As a result of this news, the price of Extreme stock dropped from $16.64 per share when the market closed on January 30, 2024 to $12.59 per share on February 2, 2024, a 24% decline over three trading days on unusually heavy volume.
If you purchased Extreme common stock during the class period and would like to receive more information or join the action, please enter your contact information below for a FREE consultation and click “Submit Your Information”.
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