Cogent sells data centers, faces wave of backlog lawsuits
Data center sale sharpens focus Cogent closed the sale of 10 data centers for $225 million in cash. That brings in money, trims a side business, and lets management concentrate on its core network and internet-access operations, which could support margins and cash flow over time.
It is the only genuinely new positive event this period and directly affects Cogent's capital and business focus.
Securities fraud lawsuits pile up Multiple law firms filed class actions claiming Cogent misled investors about its optical wavelength order backlog, saying most orders were unlikely to become paid ones. These suits keep legal and reputational risk in front of investors and can weigh on the stock.
The wave of new class action filings is the dominant new negative development and explains why sentiment stays pressured.
Dividend and pledged-share claims resurface The complaints also allege Cogent hid that its dividend was unsustainable and that pledged shares could be force-sold. Those claims echo the 98% dividend cut and $82.5 million of seized stock, keeping doubts about financial stability alive for investors.
It shows the lawsuits target core financial-credibility issues, not just one-off disclosure errors.
Backlog doubts tied to May stock plunge One filing points to the May 4, 2026 disclosure that customers were delaying wavelength installations, which sent the stock down 29% in a day. The lawsuits keep that demand problem in focus, reminding investors the growth story behind the wireline acquisition is still unproven.
It links the legal risk to the underlying demand weakness that drives Cogent's valuation.