AVAV Stock Plummets, Reversing An Earlier 20% Spike Today – What’s Spooking Investors?

Raymond James downgraded AeroVironment to ‘Underperform’ from ‘Strong Buy’ and removed the firm's prior $348 price target, as per TheFly.

• The downgrade came after the U.S. Space Force announced that it is putting the Satellite Communications Augmentation Resource (SCAR) program back up for competition. 
• A Raymond James analyst said that SCAR was the company's largest program of record at about $1.4 billion of value. 
• The company's core backlog appears to be in a non-growing or contracting state over the next few quarters, the analyst told investors in a note. 

AeroVironment Inc.’s stock fell more than 17% on Monday, giving up its gains from earlier in the day after it was downgraded at Raymond James. 

Raymond James downgraded the company’s shares to ‘Underperform’ from ‘Strong Buy’ and removed the firm's prior $348 price target, as per TheFly. 

AeroVironment (AVAV) stock, which was up nearly 20% earlier in the day, reversed course after the analyst’s note. 

Analyst Rationale

The downgrade came after the U.S. Space Force announced that it is putting the Satellite Communications Augmentation Resource program back up for competition. 

“This was the company's largest program of record at about $1.4 billion of value,” said the analyst, adding that Aerovironment had $2.8 billion of total backlog and contended this may erase $1 billion - $1.4 billion of that total. 

The company's core backlog appears to be in a non-growing or contracting state over the next few quarters, the analyst told investors in a note. 

Drone-Maker Stocks

Stocks of drone makers were in focus on Monday after the U.S. and Israel launched coordinated strikes on Iran over the weekend, resulting in the killing of Supreme Leader Ayatollah Ali Khamenei. 

Shares of Ondas (ONDS) jumped nearly 10%, while Red Cat’s (RCAT) stock surged more than 17% at the time of writing. 

The operation, referred to as "Operation Epic Fury," was carried out under Israeli Prime Minister Benjamin Netanyahu and U.S. President Donald Trump, targeting Iranian military assets.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around AVAV stock trended in ‘extremely bullish’ territory amid ‘extremely high’ message volume. 

One user at Stocktwits called the stock move a ‘violent sentiment change.’ 

One bullish user called the stock move an ‘overreaction’.

Another user, however, predicted that the stock would hit $240 - $250, if the war prolongs, thereby increasing demand for drones. 

Shares of AVAV have risen 34.5% over the past year. 

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