What is the likely magnitude and timeline of LFMD's stock price reaction to the announced securities fraud investigation?

Likely magnitude:

A securities‑fraud probe is one of the most bearish catalysts for a small‑cap “legal‑risk” ticker. With a –70 sentiment score and an already thin float, a reaction in the range of 12‑18 % down is common for the first 24‑48 hours after the press release. The move will be amplified by heightened short‑interest and low‑liquidity, so the initial decline often overshoots the “fundamental” penalty and can hit 20 % before the market steadies.

Timeline:

- Intraday (same‑day) – Expect a sharp gap‑down at the open (or after‑hours) as the news is digested, accompanied by a surge in volume and widening bid‑ask spreads.

- 48 h‑1 wk window – The most pronounced price decay occurs within the first two trading sessions as analysts, institutional investors, and the SEC’s eventual filing details become clearer.

- Beyond 1 wk – If the investigation expands (e.g., material misstatements, large fines, or potential delisting), the downtrend can continue, but absent further negative disclosures the stock typically rebounds toward its pre‑news support zone within 10‑15 days.

Trading implications:

- Short‑term bias: Take a short or buy‑put position with a tight stop (≈3‑4 % above current levels) to protect against a quick bounce if the market over‑reacts.

- Technical watch: Monitor the $0.75‑$0.80 “sell‑off” area (≈20‑day SMA) and the $0.70 USD support level that has held since the February low. A break below $0.70 signals deeper fundamental fallout.

- Volatility hedge: If you’re long, consider a protective collar—buy 1‑month calls at the $0.85 strike while owning the stock, and sell 1‑month puts at $0.75 to offset downside while keeping upside upside‑potential if the probe is resolved benignly.

In short, the announcement will likely trigger a moderate‑to‑large (12‑18 %) sell‑off within the next 48 hours, with the most aggressive price impact front‑loaded. Position accordingly, manage stops tightly, and keep a close eye on any SEC filings or company updates that could either deepen the discount or pave the way for a rebound.