The Law Offices of Frank R. Cruz announces that a class action lawsuit has been filed on behalf of investors who purchased Napco Security Technologies, Inc. (“Napco” or the “Company”) (NASDAQ: NSSC) securities between February 5, 2024, to February 3, 2025, inclusive (the “Class Period”). Napco investors have until June 24, 2025 to file a lead plaintiff motion.

What Happened?

On February 3, 2025, Napco released its second quarter fiscal 2025 financial results, revealing a reduction in hardware sales due “primarily … to reduced sales from 2 of the company’s larger distributors.” The Company pulled back their long-term 45% EBITDA margin target, stating that it “[doesn’t] know” if the target can be reached by the end of fiscal 2026.

On this news, Napco’s stock price fell $9.77, or 26.6%, to close at $26.93 per share on February 3, 2025, thereby injuring investors.

What Is The Lawsuit About?

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) the Company was simply not equipped to adequately forecast demand for its products or otherwise minimized the impact of potential demand fluctuations to continue to promote its lofty margin projections which relied upon continually increased sales volumes; and (2) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.