This article is a follow up to Can it get any worse? New space economy SPAC companies performance over last 52 weeks (as of June 30, 2022).
Class Action Lawsuit
Kerrisdale Capital Management published a report “Astra Space Inc. : Headed For Dis-Astra” during market hours on December 29, 2021. The report alleged a multitude of issues. On news of the report, Astra stock price dropped approximately 14% on December 29, 2021.
The Kerrisdale report makes the following points:
- Astra’s rocket launch projections are nonsense.
- Astra is poorly positioned within an overcrowded small launch vehicle market and is falling behind its competitors.
- Astra is expected to have many more failures as they ramp up their launch efforts.
- Six months into public life and Astra has already missed expectations.
- Astra’s strategic direction lacks differentiation and raises concerns.
The report is interesting and worth reading.
The Rosen Law Firm filed a Class Action Complaint For Violation Of The Federal Securities Laws against Astra on February 9, 2022. To support their allegations, the lawsuit references the Kerrisdale report and statements made by Astra in investor presentations and media.
The following excerpt from the lawsuit summarizes the claims made against Astra.
The statements referenced above were materially false and/or misleading because they misrepresented and failed to disclose the following adverse facts pertaining to the Company’s business which were known to Defendants or recklessly disregarded by them. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) Astra cannot launch “anywhere”; (2) Astra significantly overstated its addressable market; (3) Astra overstated the effectiveness of its designs and reliability; (4) Astra significantly overstated its plans for diversification and its broadband constellation plan; and (5) as a result, Defendants’ public statements were materially false and/or misleading at all relevant times.The Rosen Law Firm, Class Action Complaint For Violation Of The Federal Securities Laws against Astra, February 9, 2022
Astra has denied the claims and plans to vigorously defend themselves.
There are 3 other lawsuits in progress that are listed on the Justia website:
Possible New Shareholder Litigations
Other lawsuits are possible, including:
A Ticking Time Bomb
Astra is exposed to potential lawsuits related to issues related to significant issues with their financial controls.
We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control, which may result in material misstatements of our financial statements or cause us to fail to meet our periodie reporting obligations. We have identified material weaknesses in our internal control over financial reporting as of and for the years ended December 31, 2021 and 2020. material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.Astra Space Inc. SEC Form S-1, July 11, 2022
Astra is Struggling
In addition to the lawsuits, Astra faces challenges as outlined in this article The next 6 months may determine if Astra has a future or is relegated to the dustbin of history…
It is particularly worth noting that as an aspiring launch service provider, Astra is struggling with their launch vehicle technology. They currently have an 80% overall launch failure rate and a 60% failure rate on their current Rocket 3.3 launch vehicle. Furthermore, the company had a very public failure when they were unable to place two NASA satellites into orbit on June 12, 2022.
Astra’s challenges have not gone unnoticed by investors. $ASTR has lost 90% of its value for the 52 weeks ending June 30, 2022.
To end on a positive note, Astra was added to the Russell 3000 index in June.
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This article will be updated as new information is available.
This article was last updated on July 12, 2022.
Additional information for the curious