AeroVironment stock fell out of the sky today. Image source: Getty Images.

What happened

Tiny drone-maker AeroVironment (NASDAQ:AVAV) took a tumble Wednesday morning, falling as much as 12% in early trading, before recovering to a recent decline of about 9.7% as of 11 a.m. EST.

So what

Blame earnings for the fallout. Tuesday night, AeroVironment reported its fiscal Q2 2017 numbers, and the news was not good at all. Sales declined 23% to just $50.1 million for the quarter, with sales of unmanned aerial systems (aka "drones") responsible for the entirety of the decrease. Drone sales declined $15.8 million year over year, only partially mitigated by a small $1.1 million increase in sales of efficient energy systems (i.e. battery rechargers).

Profits were down as well -- big time. Whereas one year ago, AeroVironment was pleased to report a $4.4 million net profit, this time around, Q2 showed a $4.2 million loss. That worked out to a $0.18 per share loss for investors.

Now what

AeroVironment's headline numbers were lousy, there's no doubt about that, and investors are punishing the stock accordingly on Wednesday. And yet, the stock is not entirely without hope. Alongside all the bad news, AeroVironment noted that its funded backlog has nearly doubled year over year to $119.6 million. Those are sales that are in the bag, and will tend to support management's objective of hitting $260 million to $280 million in revenues for this full fiscal year. What's more, by year end, AeroVironment promises to reverse last quarter's losses and end the year with $0.20 to $0.35 per share in profit.

Granted, with AeroVironment stock currently trading for $26.50 a share, this implies that the stock could be trading for as much as 130 times this year's profits -- which probably isn't something its investors want to hear. But given that the alternative would be continued reports of losses, giving the stock no "P/E" at all, maybe beggars can't be choosers.