So, AeroVironment (AVAV +2.28%). They make drones. Cool drones, admittedly. But last week? Let’s just say their stock took a swan dive that would make Esther Williams reconsider her career choices. We’re talking a 21.7% drop in four days. It was less “Top Gun” and more “drone gently floating into a ditch.” As of Monday midday, it was flirting with a 23% loss. Look, I’ve seen better returns from my nephew’s lemonade stand.
And the culprit? Not geopolitical tensions. Not a rogue swarm. Nope. It was… paperwork. Seriously.
AeroVironment’s Tuesday: From Buzz to Bust
Returning from a long weekend is always a bit like re-entering society after a hibernation. But for AeroVironment, the welcome-back party involved a “stop work order” on their BADGER phased array antenna system. Apparently, the U.S. government decided, mid-project, to hit the pause button. It’s like being halfway through a soufflé and someone saying, “Actually, let’s make a meatloaf instead.”
BADGER, for the uninitiated, is a radar system for tracking satellites. AeroVironment was all hyped about it last September, issuing a press release that read like a space opera script. They promised delivery in the “coming months.” Now? Well, let’s just say the Space Force might be waiting a while. It’s the kind of thing that makes you wonder if someone forgot to file the right form in triplicate.
What Does This Mean for AeroVironment (and Your Portfolio)?
AeroVironment, in its SEC filing, attempted a bit of corporate optimism. (They conspicuously skipped the press release, which is always a tell.) They framed it as a chance to “negotiate an amended agreement.” Translation: “We’re hoping they’ll still let us build the thing, even if we have to re-do the budget.” But here’s the kicker: that amended agreement likely involves switching to a “firm-fixed price” contract.
See, a fixed-price contract is what happens when you’ve probably overpromised and under-budgeted. It means AeroVironment isn’t guaranteed a profit. It’s like agreeing to remodel your kitchen for a flat fee, then discovering your plumbing is held together by hope and duct tape. Cost overruns? Those come straight out of AeroVironment’s pocket. Suddenly, building a satellite tracking system feels less like innovation and more like a high-stakes game of Jenga.
Should You Buy AeroVironment Stock? (Asking for a Friend)
Let’s be real, AeroVironment was expensive before the BADGER debacle. After the stock shed 20%? It’s still… optimistic. They’ve lost $70 million over the last year and burned through $240 million in cash. Analysts predict they’ll eventually turn a profit, but even that projection values the stock at a ridiculously high multiple. We’re talking 130 times forward earnings. That’s like paying for a lifetime supply of avocado toast for a single slice.
Sure, they’re projecting 20% annual earnings growth. But at this price? It’s a lot to pay for potential. Frankly, it feels less like an investment and more like a performance art piece about irrational exuberance. So, yeah. I’m leaning towards “sell.” Unless you have a particular fondness for overpriced drone companies. Then, by all means, go for it. Just don’t say I didn’t warn you.
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2026-01-28 00:22