AVAV: Drone Revenue Triples as Margins Collapse
AeroVironment (NASDAQ: AVAV) has transformed from a niche tactical drone maker into a $10.3 billion defense powerhouse, but the market is struggling to decide what the company is worth. Shares trade at $206.58 after a punishing 18% single-day decline that erased a morning rally, leaving the stock 51% below its 52-week high of $417.86. The volatility reflects a company in transition. A transformative acquisition roughly tripled revenue from $167.6 million to $472.5 million per quarter, but gross margins collapsed from 38% to 17.4% in the process. With the U.S. military now actively deploying Switchblade drones in the Iran conflict and a $990 million Army contract in hand, AeroVironment sits at the center of modern warfare — but investors must decide whether the growth justifies a stock trading at nearly 39 times sales with no earnings. Earnings on March 10 will be the next major catalyst, with analysts expecting the company to show whether margin recovery is beginning or whether acquisition integration costs continue to weigh on profitability.