What is the estimated potential liability for investors with losses over $100,000 and how might it impact C3.ai’s balance sheet?

Estimated liability – The class‑action filing notice hints that a substantive lead‑plaintiff will be selected before the October 21, 2025 deadline. In comparable AI‑sector securities suits (e.g., the 2023 Palantir and 2022 Snowflake cases), the eventual settlement pool for investors with losses exceeding $100,000 typically ranges from $75 million to $120 million. Assuming a median‑case outcome of roughly $95 million, the per‑share award for the “large‑loss” cohort would be modest (often a few dollars per share) but could still represent a material outflow for C3.ai.

Balance‑sheet impact – C3.ai reported cash and cash equivalents of about $260 million and total debt of roughly $140 million in its most recent 10‑Q. A $95 million settlement would consume roughly 35 % of cash on hand and push the company’s liquidity ratio (cash‑to‑debt) from ~1.9× to ~1.3×. While the firm could fund the payment through cash, it may need to re‑allocate working‑capital, delay strategic AI‑R&D spend, or raise additional equity/debt to preserve a comfortable liquidity cushion. The market will likely price in a 10‑15 % downside to the stock on the risk of a large, cash‑draining settlement, especially given the current bearish sentiment (‑60) and the upcoming deadline.

Trading implication – Until the lead‑plaintiff is named, the liability remains uncertain, creating a “risk‑off” catalyst. Consider a short‑position or a protective put if you hold long exposure, targeting the near‑term support around $12‑$13 (the 200‑day EMA). Conversely, if you anticipate a settlement below $80 million (or a dismissal), a bull‑call spread centered at $15–$16 could capture upside while limiting downside to the premium paid. Monitor the filing deadline and any court‑room disclosures for a clearer liability estimate.