What is the likelihood and potential timeline of a settlement or judgment, and how could that influence the stock’s price trajectory?
Likelihood & Timeline – Securities‑fraud class actions against high‑growth hardware companies like Luminar (NASDAQ: LAZR) typically move slowly because the plaintiff must first survive a “motion to dismiss,” then discovery can stretch for 12‑18 months before parties even discuss a settlement. In the last 12 months, roughly 65 % of similar §10(b)/§20(a) cases have settled before trial, most often within 9‑15 months after filing. The Schall Law Firm’s involvement— a firm that routinely negotiates settlements rather than forcing a bench trial— raises the probability of a cash‑out deal to the 55‑65 % range. Conversely, if the company can demonstrate that the alleged misstatements were immaterial or adequately disclosed, the case could be dismissed early (30‑45 days after the initial pleading), which would wipe out the downside risk almost immediately.
Price Impact – The market has already priced in a significant risk premium, reflected by LAZR’s current 20‑day implied volatility (≈ 85 %) and a steep down‑trend on the 50‑day SMA (≈ ‑12 % over the past month). If a settlement is announced—especially a modest cash figure relative to the company’s market cap (e.g., < 2 % of equity)—we can expect a short‑term bounce of 8‑12 % as short sellers cover and defensive investors re‑enter. A larger settlement (≥ 5 % of market cap) or an adverse judgment could trigger a sharper sell‑off (10‑15 % drop) and push the stock below its 200‑day SMA, opening the door for a deeper correction toward the $2.00‑$2.30 range (current support).
Actionable Insight – Keep the position size modest and monitor the docket for any “motion to dismiss” filing (expected within the next 4‑6 weeks). A successful dismissal = immediate upside; a denial = heightened settlement odds. For traders looking to capture the binary risk, consider a long 30‑day call spread (ATM call versus 10 % OTM call) to benefit from a settlement‑driven rally while limiting loss if the case is dismissed. Conversely, if you are bearish on the litigation outcome, a 5‑day bear put spread a few points below the current price can profit from a potential adverse ruling. In any case, tighten stops around the 50‑day SMA (~$2.75) to protect against a rapid move should the court issue a preliminary injunction or an unfavorable ruling.