STX Stock Gains Over 6% — Company Settles Huawei Lawsuit For $175M

• Investors alleged Seagate concealed more than $1.1 billion in hard drive sales to Huawei, inflating profits and its stock price.
• The proposed settlement follows a record $300 million penalty Seagate paid in 2023 to resolve related export-control allegations.
• Seagate has set aside $105 million for the settlement, with insurers expected to cover roughly $70 million.

Shares of Seagate Technology (STX) rose over 6% during afternoon trading on Monday after the company agreed to a $175-million settlement to resolve shareholder claims related to its sales of hard disk drives to Huawei.

Seagate said it has set aside $105 million for the settlement, while insurers are expected to cover about $70 million of the total amount.

Shareholders Alleged Huawei Sales Were Concealed

The proposed class-action lawsuit was filed against Seagate chief executive Dave Mosley and chief financial officer Gianluca Romano. Shareholders alleged the company boosted its profits and share price by failing to disclose sales of more than 7.4 million hard disk drives to Huawei, reported Reuters.

The settlement was filed late on Friday in federal court in San Francisco and still requires approval from a judge.

STX Denies Wrongdoing

Seagate denied wrongdoing in agreeing to the settlement. The lawsuit accused the company of concealing hard drive sales to Huawei that allegedly violated U.S. export control laws.

In 2023, Seagate agreed to pay a $300-million penalty to the U.S. Department of Commerce’s Bureau of Industry and Security over the matter. The agency described it as the largest civil penalty in its history that was not tied to a criminal case.

The proposed class period covers Sep. 14, 2020, through April 19, 2023. Lawyers representing shareholders are expected to seek up to 25% of the settlement fund in legal fees.

STX Stock: What Retail Sentiment Says

Sentiment around STX on Stocktwits remained in “bearish” territory on Monday, unchanged in the past 24 hours.

The STX stock has rallied nearly 695% over the last 12 months. 

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