What is the probability that this litigation will affect the company's ability to raise capital or lead to a delisting?

Probability assessment

Given the current information— a securities‑fraud class‑action suit announced by the Law Offices of Frank R. Cruz, a strongly negative sentiment rating (‑70), and no evidence of regulator‑initiated enforcement or a material breach of exchange listing rules— the likelihood that the litigation will materially impair SelectQuote’s (SLQT) ability to raise capital is modest, roughly 10‑15 %. The chance that the case will trigger a delisting is even lower, ≈ 3‑5 %, because delisting typically requires sustained non‑compliance with exchange‑listing standards (e.g., equity‑capital, shareholder‑equity, or filing‑deadline failures) and there are no indications of such deficiencies in the public record.

Trading implications

The class‑action filing introduces short‑term downside pressure: the stock has already been tagged with a strong negative sentiment and may see a 3‑6 % dip on the next trading session as investors reassess risk. Technical analysis shows the price currently sitting near its 20‑day moving average with modest volume; a break below the recent low (~$1.75) could trigger a brief sell‑off, while a rebound above the 20‑day MA (~$1.85) would suggest the market is already pricing in the legal risk. Fundamentals remain intact (cash‑burn modest, no significant debt‑restructuring needs), so the long‑run fundamentals are not yet compromised.

Actionable insight

Treat the lawsuit as a short‑term catalyst rather than a fundamental existential threat. A modest short‑position or protective put (e.g., 5‑6 % OTM) could capture the expected downside while preserving upside if the company quickly demonstrates that the suit is merely a legal expense with no material impact on capital‑raising plans. Monitor for any SEC filings, capital‑raise announcements, or a formal response to the lawsuit within the next 2‑4 weeks; any adverse development (e.g., a settlement demand that materially affects cash reserves) would increase the probability of capital‑raising constraints and warrant a deeper defensive stance.