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
sean.donohue@sprucepointcap.com
212-519-9813
Spruce Point Capital Management, LLC is a member of the
Financial Industry Regulatory Authority, CRD number 288248.
View original
content:http://www.prnewswire.com/news-releases/spruce-point-capital-releases-a-strong-sell-forensic-research-opinion-on-aerovironment-inc-nasdaq-avav-300551981.html
SOURCE Spruce Point Capital Management, LLC