Why Aerovironment Stock Popped And Then Dropped Today
Key Points
The drone maker opened up double digits in response to the Iran attack.
A report showing it could lose a valuable contract then drove it down double digits.
Raymond James triple downgraded the stock on the news.
- 10 stocks we like better than AeroVironment ›
AeroVironment (NASDAQ: AVAV) investors started off the morning in high spirits as the drone maker was one of several defense stocks to rally in response to the attack on Iran over the weekend.
The stock was up as much as 20.1% shortly after the opening bell rang, but then gave up those gains and fell into negative territory after Space News reported that Aerovironment (AV) could lose its approximately $1.4 billion contract with the Space Force as the Pentagon is reopening the program for bidding.
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 »
Raymond James triple-downgraded Aerovironment on the news, lowering its rating from strong buy to underperform.
As a result, AeroVironment stock was down 19.5% as of 2:00 p.m. ET on the news.
Image source: Getty Images.
Is AeroVironment about to lose out on $1.4 billion?
According to Space News, as part of the Pentagon's aim to break away from cost-plus contracting, it's reopening the Satellite Communications Augmentation Resource (SCAR) program to build mobile ground stations used to track and operate spacecraft.
The $1.4 billion contract had been awarded to AeroVironment subsidiary BlueHalo, which it acquired last year, but the Pentagon is reopening it in order to diversify its suppliers and possibly lower costs.
The BlueHalo unit in question, named BADGER, had hit a roadblock in January when the U.S. government issued a stop-work order for delivery of the units.
AeroVironment described the process as a renegotiation.
What it means for AeroVironment
The BADGER deal is a huge contract for AeroVironment, and Raymond James called it its largest program of record in the downgrade note. The SCAR deal makes up close to half of AV's total $2.8 billion backlog.
It's unclear how the SCAR reopening will work out for AeroVironment, and it could retain a significant portion of the contract in the end. However, the news introduces a lot of uncertainty for investors, and it's clearly a setback for the company.
Given the size of the contract, it's not surprising to see the drone stock down double-digits today.
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 $519,015!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,086,211!*
Now, it’s worth noting Stock Advisor’s total average return is 941% — 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 March 2, 2026.
Jeremy Bowman 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
