Why Did AeroVironment Stock Drop Today?
Key Points
The U.S. Army awarded AeroVironment a $186 million task order for Switchblade drones yesterday.
The order was part of a previously awarded $990 million IDIQ contract.
- 10 stocks we like better than AeroVironment ›
AeroVironment (NASDAQ: AVAV) stock tumbled 4.6% through noon ET Friday on no obvious bad news. Actually, the contrary: AeroVironment had excellent news just yesterday.
For $186 million, the U.S. Army will order an unspecified number of AV's Switchblade 600 Block 2 and Switchblade 300 Block 20 loitering munition systems armed with explosively formed penetrators (EFP).
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
AeroVironment investors made the logical choice and bid up this maker of military drones 1.7% yesterday. But today they're taking that money back -- and more. As of this writing, not only is AeroVironment stock below where it traded the day before the contract was announced; it's actually trading back near levels last seen mid-month.
But why?
Image source: Getty Images.
The U.S. Army is looking for a few good drones
Partly, it's probably because yesterday's contract announcement doesn't actually involve AeroVironment getting any "new" money from the Army.
As the company advised, the $186 million order is part of a previous $990 million Pentagon indefinite delivery, indefinite quantity (IDIQ) award that AV received in 2024. The award does confirm the Army's "confidence in the next evolution of the Switchblade family and its relevance to modern, contested battlefields," as AV Senior VP of Loitering Munitions Brian Young asserted.
But it doesn't really add anything to future revenue or future profit.
Is AeroVironment stock a sell?
That's one reason investors' enthusiasm for AeroVironment stock may be fading. A second reason is valuation.
Priced at $248 a share and with an $18 billion market capitalization, AeroVironment sells for a pricey 150 times trailing earnings right now, and for a price-to-sales ratio of 10.9. That's an extremely expensive valuation for a defense stock -- as I've previously explained -- leading me to conclude that investors are really selling off AV stock for just one reason:
It costs too much.
Should you buy stock in AeroVironment right now?
Before you buy stock in AeroVironment, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AeroVironment wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $456,188!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,133,413!*
Now, it’s worth noting Stock Advisor’s total average return is 916% — a market-crushing outperformance compared to 194% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of February 27, 2026.
Rich Smith 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.
Recommended Articles
