Photronics Faces Securities Investigation After $1.1 Billion Sell-Off

The scrutiny centers on an accounting maneuver from late 2025. In December, Photronics reported a $16.8 million boost to its GAAP net income, attributing the gain to the reversal of a tax valuation allowance. Management at the time cited improved domestic execution and a stronger outlook for the company’s US business, a statement that fueled a 45% surge in share price. However, the operational reality unveiled on May 28, 2026, painted a starkly different picture. The company reported a 6.7% decline in overall revenue, with integrated circuit sales dropping 11% and operating margins contracting by 17.6%.

This discrepancy between the December accounting adjustments and the subsequent quarterly performance wiped out $1.1 billion in market capitalization. Adding to investor concerns, SEC filings indicate that company insiders divested more than $15 million in stock during the three months preceding the earnings crash. Reed Kathrein, the Hagens Berman partner leading the probe, is now focusing on the validity of the tax allowance reversal. The investigation seeks to determine if the company’s leadership provided an inaccurate picture of its financial viability to the market.