Astra stock plummets with launch failure and is hit with class-action lawsuit

We’re at a point in history where we’re seeing the booming world of retail trading meeting the new territory of publicly-traded rocket launch providers. This week, Astra has shown that things aren’t always bright and rosy when these two worlds meet.

Astra is having a tough week.

The plucky new rocket manufacturer, and space fans, have been excited to finally have their first launch from Florida at Cape Canaveral Space Force Station SLC-46. The company’s previous launch attempts from Kodiak, Alaska have been met with mixed success with some spectacular failures. But after achieving orbit on a test flight in November of 2021, Astra felt ready to handle its first customer payload. That brings us to this week.

After a few delays, the skies cleared enough for an attempt on Monday. As the clock hit T-0, the engines ignited…then shut down. As everyone’s eyes were glued to the launch webcast, the share price plummeted in response. So much so that the falling price triggered an automatic halt to trading, the first of the week.

Trading halts can happen for a number of reasons. Sometimes they’ll happen preemptively if some big news is about to be released. Or if a share price changes by a certain amount in a given time (10% in 5 minutes). When Monday’s trading halt occurred, Astra’s share price went from a high of $5.63 to a low of $4.37 after the aborted launch. Trading was eventually resumed and Astra’s price saw a low of $4.31 for the day.

While Astra worked through the trouble (a minor telemetry issue that they say would’ve been a non-issue if they had launched), the price slowly recovered over the next three days. The cycle was beginning again as liftoff approached on Thursday.

Astra’s first Florida launch

Liftoff occurred right at the beginning of the launch window and the stock price went with it. Within seconds, the number of people buying and selling went crazy. The stock price peaked at $6 after holding steady in the mid to upper $5 range. Astra never saw the $6 peak again. The old mantra was at work here: Buy the hype (“This is going to be great when they finally launch!”), sell the news (“They launched! Cool! Party’s over, time to sell.”). $6 was a nice round number to set automatic sells and, boy, did a lot of people sell!

While LV0008 was still in flight, the price began to come down to the lower $5 range. Not surprising considering the large sell volume. It was at about this time that the world started to notice that something wasn’t quite right with the mission. The second stage was tumbling and there was no coming back.

It was by sheer coincidence that at the same time there was another trading halt, the second of this week. The large trading volume, the imbalance of buyers versus sellers, and the sharp price changes triggered it. Since this is new territory for the stock market, it’s a stretch to assume that the halt was manually triggered in response to the launch failure. This first halt froze the price at $5.01 and would stay there for over half an hour.

Note the specific use of the word “liftoff.” It was used on purpose just to imply that LV0008 got off the pad.

Resumption of trading was quickly followed by another stoppage, again, for a substantial change in price. This one wasn’t as long lived and the hype died down as the news of the failure sank in. At close of normal trading hours, ASTR was at $3.91 and finished after hours trading at $3.89.

So what happens now? Astra is going to go through the normal routine of figuring out what went wrong and implementing the fix before their next launch attempt. We see this any time a launcher has a failure. The share price will likely fall some more as investors lose faith. A decline in price could also be compounded by any declines in the broader market.

Astra faces class-action lawsuit

But Astra’s troubles aren’t done with a failed launch. Shortly after the mission was lost, news broke of a class action lawsuit against Astra’s CEO Chris Kemp and CFO Kelyn Brannon. In the suit, plaintiffs claim that investors were misled by the promises that were made with regards to such things as their “launch anywhere” capability and the “effectiveness of its designs” amongst other complaints. News of this will likely drive down the price even further. This suit is just beginning so a resolution is a ways away.

This has turned into a week of lessons for many. For the team at Astra, they remain determined to figure out what went wrong and get it right next time. The outpouring of support for them since the failure shows that their fans want to see them succeed. For what it’s worth, the team here at Space Explored wishes them well also. For investors, It has been a lesson in how to handle trading companies like these in this new era of investing in space.

Author’s note: In the interest of full disclosure, I actively traded Astra stock this week. I bought and sold based on what was happening in real-time. Nothing in this article constitutes financial advice or an attempt to affect share prices. This is an after-the-fact account of this week’s events and my own speculation on what is to come.

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