AVAV Stock Faces Selloff After Space Force Ends SCAR Contract, But Retail Says Time For ‘Rebound Now’

The company’s CEO, Wahid Nawabi, confirmed that the U.S. Space Force terminated the agreement, prompting investor concerns.

• The decision disclosed during the company’s third-quarter earnings call will allow the Space Force to reopen the SCAR program to competitive bids. 
• The contract was not terminated due to technical issues, but rather because of disagreements over the program’s financial terms and structure.
• AeroVironment recorded a $151 million non-cash goodwill impairment in Q3 tied to SCAR.

AeroVironment Inc. (AVAV) stock received a sharp blow after a major U.S. defense contract tied to space technology was abruptly halted. During its third-quarter (Q3) 2026 earnings call on Tuesday, the company’s CEO, Wahid Nawabi, confirmed that the U.S. Space Force terminated the agreement, triggering investor concerns. 

The cancellation did not stem from technical shortcomings but from disagreements over the program’s financial framework.

“Therefore, the U.S. Space Force has concluded to terminate our existing contract for convenience, pay us for our allowable incurred cost with a fee and enable AV to recompete for the program with their revised requirements and our proposed solution."

-Wahid Nawabi, Chairman, President & CEO, AeroVironment

AeroVironment stock traded over 9% lower in Wednesday’s premarket. 

What Is The SCAR Program About? 

The SCAR program is a U.S. Space Force initiative designed to modernize how the military communicates with satellites. Its goal is to replace aging, fixed parabolic dish antennas with modern phased-array antennas, specifically the BADGER system.

Unlike traditional dishes that must physically move to track a satellite, phased-array antennas use software to electronically steer their beams. This allows one ground station to track multiple satellites simultaneously. AeroVironment inherited this contract as part of its $4.1 billion acquisition of BlueHalo in May 2025. 

SCAR Program Termination: The Financial Hit

Last week, the U.S. Space Force said it is reopening the project to competitive bids, a move that could invite participation from larger defense contractors. 

The latest termination decision significantly affected AeroVironment’s financial outlook. The company recorded a $151 million non-cash goodwill impairment in Q3 tied to SCAR, as in January, AeroVironment was instructed to halt activities under its agreement to supply BADGER phased-array antenna systems intended for the initiative.

AeroVironment also trimmed its 2026 outlook, forecasting annual revenue between $1.85 billion and $1.95 billion while cutting projected earnings per share to a range of $2.75 to $3.10.

Retail Traders Are Watching The Dip

On Stocktwits, retail sentiment around the stock remained in ‘neutral’ territory while message volume jumped to ‘extremely high’ from ‘normal’ levels in 24 hours.

The stock saw a 310% surge in retail message over the last 24-hour period.  

A bullish Stocktwits user said it is time for a rebound. 

Another user said they would take a sizable position because they believe the drop from about $400 to $200 over the SCAR program development is overblown. 

AVAV stock has gaine dover 78% in the last 12 months.