AeroVironment Shares Slide After $4.1B BlueHalo Deal But Retail Sentiment Hits Year-High

AeroVironment's ($AVAV) stock price fell over 2% during mid-day trading on Tuesday following the announcement of an all-stock acquisition of defense tech startup BlueHalo. 

The decline in AeroVironment’s shares came despite a broader rally in defense stocks, triggered by Russian President Vladimir Putin's shift in nuclear weapons policy. 

The UAV-focused defense contractor plans to acquire BlueHalo, a privately held firm, in a deal valued at approximately $4.1 billion — a significant cash burn for AeroVironment, given its current market value of $5.6 billion.

This acquisition marks AeroVironment's entry into satellite communications and space-based defense technologies, areas not previously part of its portfolio.

AeroVironment Sentiment and Message Volume on Nov 19 as of 1:40 p.m. ET | Source: Stocktwits

Retail sentiment on Stocktwits surged to a one-year high of ‘extremely bullish’ (87/100) from ‘neutral’ a day ago. Message volumes saw a corresponding upward trend to ‘extremely high’ from ‘low’.

However, some users on Stocktwits have reservations about the valuation.

Meanwhile, stocks of other defense contractors, including Lockheed Martin ($LMT), Northrop Grumman ($NOC), Axon Enterprise ($AXON), and L3Harris Technologies ($LHX), were all in the green after Putin threatened the use of nuclear weapons in response to conventional attacks, raising the specter of nuclear war.

Russia’s policy change followed Ukraine's use of U.S.-made missiles against targets in Russia.

AeroEnvironment is set to release its second-quarter earnings on Dec. 4 with Wall Street expecting $0.69 earnings per share on $181.8 million in revenue, according to Stocktwits data. 

The stock has gained 56% this year so far.