Why AeroVironment Stock Is Losing Altitude Today
Key Points
Ark Invest reported that two of its ETFs reduced their positions in AeroVironment yesterday.
Despite the actions, AeroVironment still holds significant weightings in each ETF.
Shares of AeroVironment are trading at a high forward P/E multiple.
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Each day this week, AeroVironment (NASDAQ: AVAV) stock had closed slightly lower than where it had ended on the preceding day. That trend seems poised to continue today as shares of the drone maker continue to descend lower.
The cause for today's drop? Two of Cathie Wood's Ark Invest exchange-traded funds (ETFs) reported selling shares of AeroVironment yesterday, and investors seem motivated to follow suit today.
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As of 1:57 p.m. ET, shares of AeroVironment are down 5.3%, recovering slightly from their earlier decline of 6.8%.
Image source: Getty Images.
Ark Invest piloted AeroVironment stock out of not one but two ETFs
After the trading bell rang on Wednesday, Ark Invest reported that the Ark Space Exploration & Innovation ETF sold 1,129 shares of AeroVironment earlier during the market session. Plus, Ark Invest reported that its Ark Autonomous Technology & Robotics ETF also reported that it had trimmed its position, selling 3,886 shares.
Despite the recent action, AeroVironment still represents a sizable weighting in the Ark Space Exploration & Innovation ETF. The second-largest position, AeroVironment has an 8.3% weighting in the Ark Invest ETF, dedicated to companies that are helping advance the space economy.
With respect to the Ark Autonomous Technology & Robotics ETF, the fund also still counts AeroVironment as one of its largest positions. With a 5.1% weighting, AeroVironment is the fifth-largest holding in the ETF.
Should investors take flight with AeroVironment stock now?
It's little wonder that Ark Invest chose to reduce its positions in AeroVironment. Currently, shares of the drone stock are valued at a hefty 188 times forward earnings. For investors seeking drone stock exposure, AeroVironment is hardly a bargain, so choosing to invest in one of the aforementioned Ark Invest ETFs may be a smarter choice.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AeroVironment. The Motley Fool has a disclosure policy.
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