After testing $100 support since March 2023, 3M (MMM) ripped higher. It closed at $106.95 last week when it announced a $6 billion earplug settlement.
3M will pay ~ $6B to settle over 300,000 lawsuits that claimed the company sold defective combat earplugs to the U.S. military. It will pay the money over five years. The firm, which is famous for its Post-It Notes and Scotch tape, benefits from the settlement. It removes an unknown that hurt its share price in that time.
3M inherited the ear plug cost when it acquired Aearo Technologies in 2008. Last year, the unit filed for bankruptcy protection because of the multidistrict litigation. 3M wanted to shift injury claims against Aearo and 3M to a bankruptcy court. Unfortunately, a federal judge dismissed that filing in June.
3M has another legal issue to work through next. Forever chemicals in U.S. drinking water systems could cost the firm over $12 billion. It would require the firm to compensate water providers for polluting them with per- and poly-fluoroalkyl substances. This is known collectively as PFAS.
Your Takeaway
Having one of two major uncertainties will help MMM stock. The firm could sell shares to strengthen its cash balance after the rally. It could also turn its efforts on settling the Forever Chemicals lawsuit, removing a major uncertainty.
