Law Firm Probe Intensifies Legal and Governance Risks for High-Flying AST SpaceMobile

What happened

Pomerantz Law Firm has initiated an investigation into potential claims on behalf of AST SpaceMobile investors, announced on January 27, 2026, amid the stock's speculative surge to a $32 billion market cap. This news surfaces as DeepValue's report highlights ASTS's precarious financial state, with only $14.7 million in quarterly revenue, no SpaceMobile Service revenue yet, and heavy net losses of $363 million over nine months in 2025. The report criticizes management's optimistic 'fully funded' narrative, noting funding is only clear for roughly 20-25 satellites versus the 45-60 needed, raising risks of aggressive equity dilution and execution slips. Insider trading patterns, including a large sale by American Tower Corp and a forward contract by the CEO, signal waning confidence from key stakeholders, compounding governance concerns. The investigation thus amplifies existing legal and reputational uncertainties, layering new risks onto an already speculative investment case.

Implication

Investors must now weigh potential litigation, regulatory scrutiny, or settlements that could drain resources and distract management from critical deployment milestones. This legal overhang exacerbates the execution risks detailed in DeepValue's report, such as funding gaps for the constellation and competitive pressures from Starlink. Market sentiment, already anxious about ASTS's 100x sales multiple and insider selling, may sour further, increasing volatility and downside pressure. The investigation undermines management credibility, aligning with insider activity that suggests misaligned incentives, eroding trust in the long-term growth story. Consequently, the investment case weakens, favoring a cautious stance until operational progress and legal clarity emerge, supporting DeepValue's view of asymmetric downside.

Thesis delta

DeepValue's strong sell thesis, based on valuation excess and execution risks, remains intact as the law firm probe does not alter the core financial or operational challenges. However, it introduces an additional layer of legal and governance risk that could accelerate negative sentiment, validate concerns about management transparency, and increase the probability of near-term volatility or dilution. This reinforces the need for investors to avoid new exposure and monitor for further deterioration in credibility or funding sufficiency.