Drone Stocks Fall Amid Risk-Off Sentiment: AeroVironment Drops 4%, Red Cat Falls 3%
AeroVironment (NASDAQ:AVAV) fell 4% to $142.40 on Wednesday, leading a broader decline in high-beta drone stocks amid risk-off sentiment. The drop extended AVAV's year-to-date loss of 41%, despite the company reporting strong financials including a record backlog and solid quarterly results earlier this year. Red Cat (NASDAQ:RCAT) dropped 3% to $8.41, while Ondas Holdings (NASDAQ:ONDS) eased by 2%. The Defiance Drone and Modern Warfare ETF (JEDI), which tracks the sector, fell 2%, outpacing a broader market decline as represented by SPY’s 0.4% drop. The sell-off occurred without any company-specific news or catalysts for AVAV, RCAT, or ONDS. The move reflects investor rotation away from speculative high-beta stocks rather than broad-based weakness in the overall equity markets. Over the past month, JEDI has fallen 11%, and Ondas shares are down 23% year to date, while Red Cat remains up slightly for the year at +6%. This divergence highlights uneven performance across the drone sector. Investor sentiment toward AeroVironment is mixed: some point to its strong backlog and product lines like Switchblade and LOCUST as positives; others highlight AVAV’s inability to sustain gains after contract wins. Red Cat, meanwhile, has $325 million in cash from recent equity raises.
