AeroVironment Stock Slips After $1.35B Capital Raise Plan To Bolster Drone Manufacturing

AeroVironment (AVAV) stock slipped 4.5% in extended trading on Monday after the company proposed the offering of $750 million worth of common stock and $600 million worth of convertible debt.

The company expects to use the net proceeds from the offerings to repay debt and bolster its manufacturing capabilities. J.P. Morgan and BofA Securities are acting as lead book-running managers and as representatives of the underwriters for both offerings.

The military drone maker will also give underwriters of the offerings a 30-day option to buy up to an additional $112.5 million of common shares and $90 million worth of convertible debt.

AeroVironment and its peers are seeing a surge in orders as conflicts across the world, including in Ukraine, have shown the growing role drones will play in future warfare. AeroVironment ended the fiscal year 2025 with a funded backlog of $726 million, representing an 82% increase from the prior fiscal year.

Ukraine’s military, despite being inferior in scale and size to Russia, has successfully utilized low-cost commercial technology to stave off an invasion by a nuclear-powered adversary, Goldman Sachs analysts wrote in a note about the importance of drones.

AeroVironment topped fiscal fourth-quarter earnings estimates, driven by robust demand for its products, including Switchblade loitering munitions.

“With demand for Switchblades on the rise, we remain active in our manufacturing facility expansion efforts in Utah and expect to have initial production capability by the end of this fiscal year. This new production facility will enable us to support more than $1 billion in annual Switchblade revenues,” a company executive had said earlier this month.

Retail sentiment on Stocktwits was in the ‘extremely bullish’ (79/100) territory, while retail chatter was ‘extremely high’ at the time of writing.

Some users saw buying opportunities following the offering.

AeroVironment stock has risen over 80% this year.

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