Class Action Lawsuit (and other lawsuits) Filed Against Astra ( $ASTR #AstraSpace )

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.

Astra have stated in a SEC filing that they have a Directors and Officers’ policy with a retention of $20 million.

Status of the lawsuit is available at the Justia website. Court documents are available from PACER.

Other Lawsuits

In Progress

There are 3 other lawsuits in progress that are listed on the Justia website:

Gonzalez versus Kemp et al

Riley versus Astra Space Inc. et al

Meyer et al versus Kemp et al

Possible New Shareholder Litigations

Other lawsuits are possible, including:

BESPC

Levi & Korsinsky

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.