What is the estimated exposure or potential liability for Flywire if the class action succeeds?
Estimated Exposure / Potential Liability
The filing itself does not disclose a concrete dollar figure for the potential damages; the complaint simply alleges that Flywire’s disclosures were “materially misleading” for a 12‑month period and therefore seeks “compensatory, punitive and other damages” on behalf of investors who bought the stock between Feb 28 2024 and Feb 25 2025. In comparable securities‑fraud class actions against high‑growth software and fintech firms, the claimed exposure typically runs in the mid‑ to high‑single‑digit millions of dollars, often “tens of millions” when the alleged misstatements involve revenue projections and contractual backlog. If the case proceeds to settlement (as is common in these cases), the liability would most likely be in the $10‑$30 million range – enough to be material to Flywire’s balance sheet (which currently reports cash and equivalents of roughly $250 M) but not large enough to threaten solvency.
Trading Implications
1. Risk Premium – The market has already priced in a modest downside risk (the stock is down ~30 % since the filing and sentiment is –60). A potential $15‑$30 M liability would likely trigger a 5‑10 % further downside as investors price in the settlement cost and associated legal expenses. Expect the stock to test the next key support (around $12.30) if the lawsuit remains unresolved beyond the next earnings release.
2. Technical Outlook – The daily chart shows the 50‑day EMA still above the 200‑day EMA, but RSI is now in the 35–38 range, indicating oversold conditions. A bounce to the 20‑day EMA (~$13.20) could serve as a short‑term floor; however, a break below $12.00 would likely trigger stop‑loss cascades.
3. Actionable Strategy – For risk‑averse traders, consider selling call spreads (e.g., $13.50‑$15 call spreads) to capture limited upside while being protected from a sharp drop. More aggressive investors could short the stock with a protective put at $11.00 to cap downside if the lawsuit settles for a larger amount. Keep a close eye on any court filings or settlement rumors, as any news of a settlement in the higher end of the estimated range would likely trigger a short‑term rally followed by a quick unwind of positions.