Investment Research report

Kornit Digital Ltd.

NASDAQ:
KRNT
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Kornit Digital Ltd.
Teed Up And Printing Rebates
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Kornit Digital Ltd.
Update: Teed Up And Printing Rebates
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Research Overview

INDEX:
S&P 500
Sector:
Industrials
Position:
Short
Date:
May 14, 2019

After conducting a forensic financial and accounting review, Spruce Point believes Kornit Digital Ltd. (Nasdaq: KRNT), a partner in Amazon’s Merch program, is likely to see profits taper based on a slow-down of program growth which would leave a gaping hole in Kornit’s aggressive revenue growth strategy. Based on our investigation, we estimate 75% to 85% downside risk, or $4.50 - $9.30 per share.

The reports highlight several key concerns with the company, including:

  • We believe the Company faces material risks to Merch By Amazon-driven growth
  • We believe KRNT has poor earnings quality due to warrant and rebate accounting
  • Evidence that the Company’s valuation is likely to compress to printing peers
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