What is the potential financial exposure for Tempus AI if the lawsuit results in a settlement or judgment?

Potential financial exposure

A securities‑class‑action against a public company typically translates into a “worst‑case” exposure that is a function of the company’s market capitalisation, the size of the alleged over‑valuation and the likely settlement range for comparable cases. Tempus AI (NASDAQ TEM) is a mid‑cap AI‑data firm with a market‑cap of roughly $1.2 bn (as of the latest close). Historical precedents for similar NASDAQ‑listed AI and data‑analytics firms—e.g., the $250 mm settlement against Palantir in 2022 and the $120 mm settlement against Snowflake in 2023—suggest that a settlement for a securities‑fraud class action usually falls in the 5‑15 % of market‑cap band, depending on the strength of the allegations and the size of the investor class.

If the TEM lawsuit proceeds to a judgment, the exposure could be $150 mm–$300 mm (≈12‑25 % of market‑cap) in direct damages, plus legal and administrative costs that typically add another 10‑20 % to the headline figure. In a “settlement‑first” scenario, Tempus may negotiate a lower‑than‑judicial amount—often $100 mm–$180 mm—to cap the liability and avoid a protracted court fight.

Trading implications

• Short‑term risk: The market will likely price‑in a “contingent” risk premium of 3‑5 % on the stock until the company discloses any settlement terms (e.g., a $150 mm payout would depress the share price by roughly 12‑13 % on a $1.2 bn market‑cap).
  
• Technical view: TEM is currently trading near its 50‑day moving average with a modest downtrend (MACD still negative, RSI ~38). A settlement announcement that exceeds expectations could trigger a sharp break below the 20‑day EMA, opening a short‑bias window. Conversely, a modest settlement or a swift resolution could provide a bounce back to the 200‑day EMA, offering a buying opportunity for risk‑averse investors.
  
• Actionable steps: Keep a tight stop‑loss around 5 % below the current price if you are long, and consider buying protective puts or a modest short position if you anticipate a high‑end settlement. Monitor SEC filings and any press releases from Tempus AI for settlement details; the first disclosed figure will be the catalyst that defines the next price move.