POET Technologies Inc. saw its stock price climb approximately 30% in heavy Nasdaq trading on Tuesday, reaching $9.25 by late morning, as the company became the focus of a new securities class action lawsuit. The legal action, initiated by a shareholder and announced by Bernstein Liebhard, targets the company's disclosure practices concerning the cancellation of purchase orders by Marvell Technology related to its acquisition of Celestial AI.
Lawsuit Details and Timeline
The class action, filed in the U.S. District Court for the District of New Jersey, names POET Technologies, CEO Suresh Venkatesan, and CFO Thomas Mika as defendants. The lawsuit covers investors who purchased POET shares between April 1 and April 27, just before the company disclosed that Marvell had canceled all purchase orders from Celestial AI. According to POET's SEC filing on April 27, Marvell sent written notice on April 23, citing confidentiality breaches related to public disclosures of purchase order and shipping data.
Company Background and Market Context
POET Technologies is a Canadian photonics company specializing in optical engines and light-source products designed for AI systems and hyperscale data centers. These optical engines use light to transmit data, aiming to address bandwidth and power challenges in AI data centers. The company's annual filing notes a shift from 400G to 800G optical links in the industry.
Financial and Tax Status Concerns
The company's financials show a pre-tax net loss of approximately $62.96 million on revenue of just $1.07 million in 2025. Additionally, POET disclosed on April 14 that it expects to fall under the U.S. passive foreign investment company (PFIC) regime in 2025, which could create tax complications for American investors. However, CFO Thomas Mika indicated in a Stocktwits interview that the company believes it will not qualify as a PFIC in 2026, with plans to redomicile in the United States.
Short Seller and Legal Scrutiny
Short seller Wolfpack Research has raised doubts about POET's PFIC status and overall business story. Dan David of Wolfpack told Business Insider that concerns about POET's tax position predated the Marvell order news. The legal filings are accumulating as the lead-plaintiff deadline approaches on June 29.
Market and Competitive Landscape
Celestial AI's photonic-fabric technology, acquired by Marvell for $3.25 billion, is crucial for high-speed AI data transfer, competing with Broadcom and Nvidia. POET trails larger rivals with limited revenue and customer base. The company acknowledges that customers can cancel purchase orders, and its plan to redomicile faces regulatory and shareholder approval hurdles.
Outlook
Tuesday's rally does not resolve key risks. POET must address the revenue gap left by Celestial AI and navigate the class action lawsuit. The stock remains volatile as investors weigh the company's future amid legal and financial uncertainties.
