Will the involvement of Faruqi & Faruqi increase the credibility of the claims and influence investor sentiment?

Credibility boost and sentiment impact

Faruqi & Faruqi is a well‑known securities‑law boutique that routinely represents investors in high‑profile class‑action suits. Its public announcement that the firm is “investigating potential claims” against PepGen (NASDAQ: PEPG) adds a layer of professional validation to the allegations – investors and analysts tend to treat a reputable law‑firm’s involvement as a signal that the case has moved beyond the speculative stage and is now being vetted by experienced counsel. Consequently, the market will likely interpret the news as a credibility upgrade for the lawsuit, which can sharpen negative sentiment toward PepGen’s equity.

Trading implications

• Short‑bias: The negative sentiment is already reflected in the stock’s modest downside (‑40 sentiment score) and the looming August 11 2025 deadline for lead‑plaintiff nominations. If the investigation uncues material misstatements or financial irregularities, the risk of a costly settlement or a regulatory sanction rises, pressuring the price further. Traders with a bearish outlook can consider selling into short‑term rallies or placing protective stop‑losses around the current support level (check the 20‑day SMA or recent low‑bounce zone on the chart).
  
• Long‑bias (risk‑managed): Some investors may view the “investigation” stage as an early, non‑conclusive step. If the market over‑reacts, the stock could be oversold (e.g., RSI < 30, a bounce off the 50‑day moving average). In that scenario, a small‑size long position with a tight stop just above the recent swing high could capture a short‑term rebound while limiting exposure if the case escalates.

Actionable take‑away

Given the firm’s credibility, expect heightened scrutiny and a potentially sharper downtrend as the deadline approaches. Maintain a short or defensive stance unless technical indicators show a clear oversold bounce, in which case a modest, tightly‑‑stopped long could be used as a contrarian play. Monitor any follow‑up filings from Faruqi & Faruqi for concrete evidence, as those will be the next catalyst that either solidifies the downside risk or clears the path for a recovery.