Spruce Point Capital Releases a Strong Sell Forensic Research Opinion on AeroVironment, Inc (Nasdaq: AVAV)

NEW YORK, Nov. 8, 2017 /PRNewswire/ -- Report entitled "Guidance Correction:Crash Imminent" outlines how AeroVironment faces 30%-50% downside risk as a result of poor product performance, competitive positioning and limitations to further buying by select ETFs which have distorted its valuation.     

• Drones Fail in Real-World Conditions: Official statements from the DOD Inspector General alongside of select informal statements from US serviceman and foreign military advisors indicate that AeroVironment's products are unreliable, impractical and "may not be able to fulfill their mission."  This performance isn't to be unexpected given AeroVironment's track record of failed product launches, declining customer funded R&D, and <1% revenue CAGR since 2009.
• Questionable Value Proposition and Heightened Competitive Intensity:  The product use case for AeroVironment drones are further compounded by prohibitive pricing and a sense of poor value.  AeroVironment also faces heightened competition as Boeing, Intel and Flir have acquired their way into the drone market and Chinese leader DJI begins to cross over into the space with innovative and affordable offerings.    
• Terrible Capital Allocation and Governance Echoed by Undisclosed Whistleblower Complaint: AeroVironment has a history of squandered opportunity cost associated with excess capital and recently changed bonus targets to extract incentive bonuses.  Insiders have been consistent sellers of the stock and audit fees have been rising to new highs since the adoption of an equity claw back in 2013.  The company also has a history of regulatory issues (DoJ, Defense CMA), including an undisclosed whistleblower case filed by former VP Strategic Operations claiming "false billings".  
• Sourcing Incremental Buyers of the Stock is likely to Be Challenging: AeroVironment's stock has benefitted handsomely year-to-date based on the company's "bellwether" status in ROBO, the industry's fastest growing ETF in 2017.  However, ROBO's buying of AeroVironment will be constrained in the near term due to ROBO imposed ownership restrictions.  Additionally, retail buying of the stock is likely to be limited going forward given an average sell side analyst rating of Neutral and price target of -17%.   

The research report can be found on our website at www.sprucepointcap.com and updates will be posted on twitter @sprucepointcap. 

Spruce Point Capital has a short position in AeroVironment, Inc and stands to benefit if its share price falls.

About Spruce Point Capital
Spruce Point Capital Management, LLC, is a forensic fundamentally-oriented investment manager that focuses on short-selling, value and special situation investment opportunities.

Contact 
Sean Donohue  
Spruce Point Capital Management 
[email protected] 
212-519-9813

Spruce Point Capital Management, LLC is a member of the Financial Industry Regulatory Authority, CRD number 288248.

SOURCE Spruce Point Capital Management, LLC

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