Class claims cellular satellite company AST SpaceMobile duped investors

An investor in the Texas-based company says AST told a story contrary to the reality of the direct-to-cellular satellite market in order to sell securities. (CN) — In a federal class action filed Monday, an investor accused a company that provides space-based cellular satellite services of lying about the business’s position in the market and artificially boosting its stock price.Founded in 2017 by Abel Avellan in Midland, Texas, AST SpaceMobile owns satellites that act like cell towers in space to provide service to customers. In its nearly 10 years of existence, the company has partnered with major telecommunication companies, including AT&T and Verizon, and is listed on the NASDAQ.Lead plaintiff Edward Hunter claims AST violated the Securities Exchange Act of 1934 by misleading investors in order to boost the sale of its securities. In his 34-page federal class action filed in the Western District of Texas, Hunter says Avellan and AST’s chief financial officer, Andy Johnson, lied about the company’s ability to achieve business goals and competitiveness in the direct-to-cellular satellite market.In a March 2025 press release, AST touted its proprietary technology and partnerships to the public, with Avellan claiming his company entered the year “even better positioned to lead the emerging direct-to-device satellite communications industry that we invented.”“We are laser-focused on building and deploying satellites and expanding our commercial agreements during 2025, moving toward commercial-scale revenues,” Avellan said in the release. “Our vision has never been clearer, and we believe we have the resources and capabilities to execute our plans.”But that rosy outlook soured in September 2025, when the investment bank UBS Group downgraded its recommendation to investors from buy to neutral, noting increased competition from SpaceX following its $17 billion purchase of spectrum licenses from telecommunications company EchoStar. AST’s image took another hit in January when another financial services firm, Scotiabank, advised investors to sell their shares in the company, pointing to SpaceX’s dominance in the market and lack of user adoption in the U.S. and Japan.Throughout this period, AST issued a flurry of announcements, offering billions in senior bonds to investors. Hunter claims these actions and the company’s misrepresentations led to the decline in the value of its securities and significant losses and damages to himself and class members.Now trading around $58 per share, AST has lost half of its stock value from its May peak of $133. However, the company is still up over the past year.Courthouse News reached out to AST for comment on Hunter’s class action, but has not received a response.Hunter and class members have demanded a jury trial in the case and are seeking AST, Avellan and Johnson to be held liable for damages under the Exchange Act.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads