What is the estimated timeline for the investigation and potential litigation outcomes?

Estimated timeline

Schall Law’s announcement does not include a concrete timetable, but the typical chronology for a shareholder‑rights case of this size gives us a useful framework.

- Investigation phase: The firm will first conduct a “discovery” review of Confluent’s public filings, internal communications and trading data. For a NASDAQ‑listed company with a sizable investor base, this step usually runs 3 – 6 months from the filing of the complaint.

- Litigation phase: Assuming the investigators uncover enough evidence to file a formal securities‑fraud suit, the case will move to the U.S. District Court docket. From complaint to a “motion for class certification” and a potential settlement or trial, the process typically spans 12 – 18 months. A settlement, if reached, often occurs earlier—often within 9‑12 months after the suit is filed—while a full trial can extend beyond the 18‑month window.

Trading implications

In the short term (the next 4‑6 weeks) the market will likely price in the uncertainty surrounding the investigation, generating elevated volatility and a modest downward bias as investors hedge against potential bad‑press. Technicals on CFLT are already showing a lower‑high, lower‑low pattern on the daily chart, with the 20‑day SMA slipping toward the 50‑day SMA, suggesting a continuation of the recent downtrend.

From a positioning standpoint, traders should consider light‑to‑moderate short‑bias (e.g., buying put options or reducing long exposure) until a concrete update—such as a “discovery‑phase filing” or a “motion for class certification”—appears. If the investigation yields a quick, decisive finding (e.g., no material misstatements), the stock could rebound sharply; conversely, a prolonged, adverse discovery would keep pressure on the share price and open the door for a deeper correction as the litigation drags toward a settlement or trial.

Actionable take‑away:

- Now: Guard against upside—tighten stops near recent swing highs (~$12.30) and consider a modest put spread to capture 4‑6 week volatility.

- Mid‑term (≈9‑12 months): Monitor court filings and any settlement news. A positive resolution could trigger a bounce‑back; a negative or extended litigation outlook will keep the downside in play, warranting a continued defensive stance.