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Why Shares of AeroVironment, Inc. Plunged 13% in August

By Travis Hoium – Sep 8, 2016 at 9:50AM

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A weak quarter hurt this drone maker, but it expects a great year ahead.

Image source: AeroVironment.

What happened

Shares of drone maker AeroVironment, Inc. (AVAV -1.03%) had a rough end to the summer, falling 12.7% in August, according to data provided by S&P Global Market Intelligence, after the company reported earnings that failed to inspire investors.

So what

Revenue dropped 23% in the fiscal first quarter to $36.2 million and net loss grew from $7.0 million to $11.6 million, or $0.51 per share. Wall Street analysts were only expecting a $0.15 per share loss, that's why the stock dropped as much as it did. 

What management didn't change is the company's full-year revenue guidance of $260 million to $280 million and earnings guidance of $0.20 to $0.35 per share. Orders just came in more slowly than expected in the first quarter, and there were challenges getting approval to sell products internationally as well.

Now what

Management may be confident the company will hit full-year guidance, but investors think odds are slim. The company even added a press release the day after earnings reminding investors that full-year guidance hasn't changed, which is unusual for a company to do. 

There's a big opportunity in the drone market for AeroVironment, but the company has to start showing it can turn opportunity into growth and profits. Until that happens, investors will continue to take a skeptical view of the company. And that skepticism was what caused shares to turn south in August.

Travis Hoium owns shares of AeroVironment. The Motley Fool recommends AeroVironment. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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