AST SpaceMobile (ASTS) Stock Sinks 6% After Securities Class Action Lawsuit Filed
Key Takeaways
- •AST SpaceMobile stock declined 6% to $56.93 on elevated volume following the filing of a securities class action lawsuit covering investors who purchased shares between March 2025 and July 2026.
- •The lawsuit alleges the company failed to properly disclose user-adoption risks and dilution linked to three separate $1 billion convertible note offerings, with a lead-plaintiff deadline of November 13, 2026.
- •Analyst coverage is divided, with five Buy, seven Hold, and two Sell ratings producing a Hold consensus and an average price target of $84.58.
- •Last quarter the company posted a $0.77 per-share loss on $31.52 million in revenue, both missing expectations, and analysts project roughly $3.2 billion in cash burn before 2029.
- •Despite the sell-off, AST SpaceMobile completed a direct-to-smartphone satellite test with TELUS in Canada and continues to attract institutional buying, with about 61% of shares held by institutions and hedge funds.
AST SpaceMobile (NASDAQ: ASTS) fell 6% in Thursday's session, closing the day at $56.93. The decline came on volume of nearly 17.8 million shares — about 8% above the stock's daily average — after shares had opened the session at $60.65.
The sell-off followed news of a freshly filed securities class action lawsuit against the company. The suit covers investors who bought ASTS stock between March 2025 and July 2026. Its claims center on disclosure: plaintiffs allege the company failed to properly warn investors about user-adoption risks and the dilution tied to three separate $1 billion convertible note offerings. None of the allegations have been proven in court, and the lead-plaintiff deadline for the case is set for November 13, 2026. Under standard procedure for US securities class actions, that date is when investors seeking to represent the class must apply for lead-plaintiff status — typically the case's first procedural checkpoint, and the step that sets up how the litigation proceeds from there.
The timing did not help matters. Broader satellite-sector jitters, stirred up by reports of a large debt deal at SpaceX, added extra pressure to an already shaky session for space stocks.
Wall Street Still Split on the Stock
Analyst opinion remains divided. Of the firms covering ASTS, five rate it a Buy, seven call it a Hold, and two have it at Sell — a consensus that works out to a Hold. The average price target across the Street sits at $84.58, a wide gap above the current trading price, though down from recent highs.
B. Riley Financial cut its rating from Buy to Neutral this month and trimmed its price target to $65 from $85. Berenberg Bank, on the other hand, started coverage with a Buy rating and a $92 target. Piper Sandler sits at Overweight with a $98 target, while Scotiabank recently moved its rating up to Sector Perform with a $50.80 target — a sign some analysts see less downside than before.
Cash Burn Remains the Core Concern
Money is the sticking point for skeptics. AST SpaceMobile posted a loss of $0.77 per share last quarter, far worse than the $0.32 loss analysts had penciled in. Revenue also came in light, at $31.52 million versus the $34.53 million expected, and net margin for the quarter landed at a negative 536.66%.
Wall Street projects the company could burn through roughly $3.2 billion in cash before 2029. That is the kind of number that keeps dilution fears alive among current stockholders — and it explains why the mechanics of the convertible notes named in the lawsuit matter: such instruments can be repaid in cash, but holders can also convert them into shares, expanding the share count along the way.
Insider activity has been mixed lately. Chief Technology Officer Huiwen Yao sold 40,000 shares in September at an average price of $58.93, trimming his position by more than half. Director Adriana Cisneros went the other direction, buying 10,822 shares in late August at $57.22 each. Insiders overall hold about 21% of the company.
Wins This Week Despite the Drop
Not everything this week has been negative. AST SpaceMobile and TELUS completed a direct-to-smartphone satellite test in Canada using regular phones, a step toward the company's goal of covering remote areas without special hardware. The company also received a mention in a U.S.-Japan technology initiative, and its multi-launch deal with Blue Origin could prove significant if the New Glenn rocket returns to flight on schedule. That launch calendar, along with the next set of quarterly results and the case's early procedural steps, now gives observers a concrete set of markers to track in the months ahead.
A competing satellite firm cleared a regulatory hurdle this week as well, adding to competitive concerns for ASTS. The company's model leans heavily on wireless carrier partnerships and regulatory sign-off, so rival progress tends to draw attention.
Institutional buying has stayed strong despite the volatility. Bank of America Corp DE increased its stake by over 140% in the first quarter, and Tidal Investments LLC grew its position by nearly 9,877% in the second quarter. Roughly 61% of AST SpaceMobile stock is now held by institutions and hedge funds.
The stock trades with a 50-day moving average of $63.10 and a 200-day moving average of $76.08, with a market cap near $22.16 billion.
