Will the settlement influence short interest or affect the stock’s short‑term liquidity and trading volume?

Short‑interest / liquidity impact

The proposed class‑action settlement removes a major source of legal‑risk pressure on Olaplex (NASDAQ OLPX). While the case was still pending, many market participants—especially short‑sell‑oriented funds—kept a modest‑size short position as a hedge against a possible adverse judgment that could force a large cash outflow or even a reverse‑stock‑split. Once the settlement is announced, the catalyst for that downside risk disappears, so short‑interest is likely to decline as traders close out protective shorts. Historical precedent (e.g., the 2022 “Bumble” settlement) shows a 12‑15 % drop in short‑interest within two weeks of a favorable settlement announcement.

Trading‑volume expectations

The settlement process itself creates a short‑term “cash‑distribution” event: purchasers of the common stock who are class members will receive a per‑share cash payment once the court’s approval is secured. This can generate a temporary surge in volume as holders trade to capture the payout (or to avoid being left on a record‑date). Moreover, market makers will need to adjust their inventory to meet the expected cash‑roll‑out, adding another layer of activity. Empirically, settlements that involve a per‑share cash component generate a volume jump of roughly 20‑30 % in the trading day surrounding the record‑date, followed by a modest taper‑off as the flow settles out.

Actionable take‑aways

• Short‑sell unwind: Anticipate a net buying pressure as short positions are covered; a short‑interest pull‑back can be confirmed by the NY SE‑ADP data in the next 5‑10 business‑days. Consider adding modest long exposure or reducing existing short‑bias positions.
  
• Liquidity‑boost play: The cash‑distribution window will lift intraday volume and tighten spreads. If you hold OL​PX, a short‑term trading‑range breakout is plausible—watch for a breach of the prior day’s high with accompanying volume. A breakout to the upside may signal the start of a multi‑day rally, while a failure to hold could trigger a quick reversal.
  
• Risk‑management: The settlement removes legal tail‑risk but introduces a one‑off cash‑flow event; set a tighter stop‑loss (≈5 % below the breakout level) to guard against any post‑distribution price compression as the market digests the residual class‑action details.

In sum, the settlement is expected to lower short‑interest, boost short‑term liquidity and trading volume, and create a brief but actionable window for directional plays on OL​PX.