01-07-2025
AeroVironment Shares Plunge in Wake of Massive Funding to Slash Debt
July 1 - AeroVironment (NASDAQ:AVAV) said it plans to issue $750 million in common stock and $600 million of convertible senior notes due 2030 to shore up its balance sheet.
The drone specialist intends to use the proceeds primarily to retire outstanding debt, with any remaining funds earmarked for general corporate purposes, including boosting manufacturing capacity.
Warning! GuruFocus has detected 9 Warning Signs with AVAV.
Shares slid more than 7% in Tuesday trading after the announcement, wiping out a portion of this year's gains. The stock had climbed about 85% since January, lifting AeroVironment's market value to roughly $13 billion ahead of the offering.
Credit Suisse and J.P. Morgan are among the lead underwriters on the deal, which comes after AeroVironment closed its $4.1 billion acquisition of Blue Arc last month. The company said strong fourth?quarter results and a recent executive order to expand U.S. drone production have bolstered its outlook.
Analysts say the move signals AeroVironment's focus on debt reduction ahead of further expansion, though investors will watch execution closely as the company scales up.
This article first appeared on GuruFocus.
