Investment Research report

AeroVironment Inc.

NASDAQ:
avav
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AeroVironment Inc.
Guidance Correction; Crash Imminent
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Research Overview

INDEX:
S&P 500
Sector:
Industrials
Position:
Short
Date:
Nov 8, 2017

After conducting a forensic financial and accounting review, Spruce Point believes AeroVironment, Inc. (NASDAQ: AVAV), a vehicle manufacturer, is developing drones that will fail in real-world conditions and is also experiencing questionable value propositions and heightened competitive intensity. Based on our investigation, we forecast 30% to 50% downside risk, or $24 - $34 per share.

The report highlights several key concerns with the company, including:

  • We believe the drones will fail in real-world conditions and that the Company lacks a value proposition
  • Evidence of terrible capital allocation and governance echoed by undisclosed whistleblower complaint
  • We believe that ETF buying is likely to be capped in the near-term
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