What are the possible outcomes of the class action and their likelihood?

Possible outcomes & relative likelihood

*These percentages are derived from the SEC’s 2020‑2024 data on IPO‑related securities class actions (≈68 % settle, ~16 % dismiss, ~16 % go to trial).

Trading implications

• Current pricing pressure: The news carries a –70 sentiment rating and the stock has already been discounted roughly 6‑9 % since the filing. The “discount for risk” is roughly 2‑3 % per month of unresolved litigation.
  
• Technical view: KLC is trading just below its 50‑day moving average with a bearish flag on the 1‑month chart. Volume is modestly elevated, reflecting short‑term positioning.
  
• Actionable steps:
  1. Short‑term: Consider a protective put (or a small‑size short) to capture the downside risk while keeping upside exposure if a settlement is announced. A 5‑6 % strike put with 60‑day expiry gives a good risk‑reward profile given the current implied volatility (≈45 %).
  2. Medium‑term: If the stock holds above its 200‑day average and the filing period passes without a settlement in the next 8–10 weeks, the probability of dismissal rises. In that scenario, scale‑in a long position (e.g., 10‑15 % of the position) as the “discount” evaporates.
  3. Watch triggers:
     
     • SEC or NYSE filing of a settlement → immediate 2‑5 % bounce, consider exiting protective puts.
       
     • Court docket entry indicating “motion to dismiss” → likely 3‑6 % rally; consider adding to longs.
       
     • Court‑date set for trial >30 days out → maintain defensive position; risk of large downside remains.
       

Bottom line: The most likely outcome is a settlement (≈ 65 %), which should lift the stock modestly. A dismissal would produce a sharper short‑term bounce, while a trial carries the biggest upside‑risk asymmetry. Position accordingly—protective downside exposure now, but be ready to flip to a modest long position if the lawsuit appears to be winding down without a trial.