AeroVironment, Inc. (AVAV) Securities Class Action Lawsuit Update

• Company: AeroVironment, Inc. (NASDAQ: AVAV)
• Lead Plaintiff Deadline: July 27, 2026
• Class Period: June 25, 2025 - March 10, 2026
• Stock Drop: January 20, 2026 - AVAV fell $61.97 (15.77%) to $330.89; March 2, 2026 - AVAV fell $43.93 (17.42%) to $208.32; March 11, 2026 - AVAV fell $13.84 (6.24%) to $207.73
• Lawsuit Type: Securities Class Action

Introduction

On May 26, 2026, a federal securities class action was filed in the United States District Court for the Eastern District of Virginia against AeroVironment, Inc. (NASDAQ: AVAV) and three of its senior executives: Wahid Nawabi, the company's President, Chief Executive Officer, and Chairman of the Board; Kevin P. McDonnell, its Chief Financial Officer; and Mary Clum, President of the company's Space, Cyber and Directed Energy business segment. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of all investors who purchased AeroVironment securities between June 25, 2025 and March 10, 2026.

At the center of this case is a $1.7 billion contract with the U.S. Space Force. AeroVironment had acquired BlueHalo in May 2025 for approximately $4.1 billion, inheriting what executives called a "$1 billion franchise" in the SCAR satellite communications program. Throughout the class period, defendants told investors the SCAR program was "very much on track," that the Space Force was "asking for more" BADGER systems, and that the company stood "ready to build more." CEO Nawabi called the program a "tremendous growth opportunity" and a "major contributor to growth" for years to come. Defendants described SCAR as "a program locked in, in a very high barrier to entry market" with a customer that urgently needed the product.

Then the story unraveled in stages. On January 20, 2026, AeroVironment disclosed that the U.S. government had issued a stop work order on the SCAR contract, sending shares tumbling 15.77%. On March 2, 2026, Space News reported that the Space Force was reopening the SCAR program to suppliers other than AeroVironment and reassessing how to move forward, and the stock plunged another 17.42%. Finally, on March 10, 2026, AeroVironment revealed that the Space Force had terminated the SCAR contract, that the company would have to recompete for the program, and that its results reflected a $151.3 million goodwill impairment tied to the SCAR stop-work order. Shares fell an additional 6.24%. According to the complaint, investors allegedly relied on defendants’ assurances about SCAR, which analysts described as AeroVironment’s largest contract.

Backdrop and Business Context

AeroVironment was founded in 1971 by Dr. Paul B. MacCready Jr., a renowned aeronautical engineer, in Southern California. What began as a small aerodynamic consultancy obsessed with ultra-efficient flight, including the pioneering Gossamer Condor and Solar Challenger aircraft, evolved over five decades into a publicly traded defense technology company. AeroVironment went public on the NASDAQ in January 2007 at $17.00 per share and relocated its headquarters to Arlington, Virginia.

The company designs and manufactures autonomous systems, loitering munitions, counter-drone systems, and space technologies for the U.S. Department of Defense, allied foreign militaries, and government agencies. Its portfolio includes the Raven, Puma, and Wasp small, unmanned aircraft systems and the Switchblade family of loitering munitions, which are widely deployed by U.S. and partner forces in over 55 countries. AeroVironment reported approximately $821 million in revenue for fiscal year 2025. The company competes in the aerospace and defense sector alongside firms such as General Atomics, Northrop Grumman, and Textron Systems, though it holds an estimated 70% share of the U.S. hand-launched Group 1 small UAS market.

In May 2025, AeroVironment completed an all-stock acquisition of BlueHalo, a defense technology firm specializing in space, cyber, and directed energy systems, in a transaction valued at approximately $4.1 billion. The acquisition brought with it a $1.7 billion contract to deliver BADGER phased array antenna systems to the U.S. Space Force's SCAR program, a modernization effort for the aging Satellite Control Network. According to the complaint, defendants consistently promoted SCAR as a cornerstone of future growth while allegedly understating the likelihood that the Space Force would reopen the program to competing vendors.

Promises Made vs. Reality

From the outset of the class period, AeroVironment's leadership wove a confident, consistent narrative around the SCAR program and its BADGER phased array antenna systems. On June 24, 2025, the company issued fiscal year 2026 guidance projecting revenue of $1.9 billion to $2.0 billion, setting the stage for a growth story anchored in the BlueHalo acquisition. When AeroVironment reported first-quarter results on September 9, 2025, CEO Nawabi told investors that BADGER "will be key growth drivers for this segment in the future," while CFO McDonnell expressed confidence that "adjusted gross margins should continue to improve throughout the year." Nawabi reinforced the message, assuring analysts, "We feel very strong about our current guidance" and predicting AeroVironment would "most likely finish the year strong."

The rhetoric intensified at the company's Investor Open House on September 30, 2025. Nawabi placed SCAR on his personal "top 10 list" of what excited him most about the company's future, calling it "a $1 billion franchise." Clum, who led the space business segment, told attendees the company's "entire team" was working "shoulder-to-shoulder" with the Space Force customer and quoted a Space Force official as saying, "We're going to need a bunch of SCARs, and we're going to need them fast as we can make them." She emphasized that "the customer is asking for more" and that AeroVironment was "ready to build more," characterizing SCAR as "a program locked in, in a very high barrier to entry market."

The assurances continued into December 2025. At the Goldman Sachs Industrial and Materials Conference on December 3, 2025, Nawabi described SCAR and BADGER as programs that would be "major contributors to growth" over "the next several years," referencing "$1.7 billion worth of funding" earmarked for the modernization effort. Six days later, during the second-quarter earnings call on December 9, 2025, Nawabi characterized the SCAR program as "a tremendous growth opportunity" and highlighted a newly secured contract for two additional BADGER systems. He told analysts the program was "very much on track," that the company was "shifting now from development activity to delivering products," and that he expected "the margins as well as the revenue of that business to actually improve" through the remainder of fiscal 2026 and beyond. McDonnell echoed the message, citing "a significant contract" for BADGER systems and noting the space segment had grown more than 20% in the quarter.

Yet on January 20, 2026, barely six weeks after these assurances, AeroVironment disclosed a stop work order on the SCAR contract. Even then, the company maintained that the order "allows for the parties to negotiate an amended agreement for the future of the SCAR program" and that it "expects to continue to deliver capabilities and products for the SCAR program." Six weeks later, on March 2, 2026, Space News reported that the Space Force was moving toward a new acquisition strategy that would likely involve other companies building versions or variants of SCAR. And on March 10, 2026, Nawabi disclosed on the third-quarter earnings call that the Space Force had terminated the contract outright, forcing AeroVironment to "recompete" for a program executives had described as “locked in” and a “$1 billion franchise.” The company recorded a $151.3 million goodwill impairment and lowered its full-year revenue guidance to $1.85 billion to $1.95 billion, down from the prior range of $1.9 billion to $2.0 billion.

As alleged in the complaint, throughout the class period defendants understated the likelihood that AeroVironment would imminently face competition from other vendors for its SCAR work and overstated the company's business and financial prospects, rendering their public statements materially false and misleading.

Timeline of Alleged Misconduct and Disclosures

Class Period: June 25, 2025 - March 10, 2026, inclusive.

May 1, 2025: AeroVironment completes the acquisition of BlueHalo in an all-stock transaction valued at approximately $4.1 billion, inheriting the $1.7 billion SCAR contract.

June 24, 2025: AeroVironment issues a press release announcing fiscal fourth-quarter and full-year 2025 results and provides fiscal year 2026 guidance of $1.9 billion to $2.0 billion in revenue.

June 25, 2025: Class period begins. September 9, 2025: AeroVironment announces first-quarter fiscal 2026 results and holds the Q1 earnings call. CEO Nawabi states BADGER and LOCUST "will be key growth drivers for this segment in the future" and expresses confidence in guidance. CFO McDonnell projects gross margin improvement "throughout the year."

September 30, 2025: AeroVironment holds its Investor Open House. Nawabi calls SCAR "a $1 billion franchise." Clum states the Space Force is "asking for more" and AeroVironment is "ready to build more," describing SCAR as "a program locked in."

December 3, 2025: Nawabi appears at the Goldman Sachs Industrial and Materials Conference. He describes SCAR and BADGER as "major contributors to growth" over "the next several years."

December 9, 2025: AeroVironment files a Form 8-K and holds the Q2 earnings call. Nawabi calls SCAR "a tremendous growth opportunity," states the program is "very much on track," and projects improving margins and revenue. McDonnell highlights a "significant" new BADGER contract.

January 20, 2026: Alleged Corrective Disclosure. AeroVironment files a Form 8-K disclosing the U.S. government has issued a stop work order on the SCAR contract. The company states it expects to continue delivering for the program. AVAV falls $61.97 (15.77%) to close at $330.89.

March 2, 2026: Alleged Corrective Disclosure. Space News reports the U.S. Space Force is reopening the SCAR program and "reassessing how to move forward" with a new multi-vendor acquisition strategy. AVAV falls $43.93 (17.42%) to close at $208.32.

March 3, 2026: AeroVironment issues a press release stating it remains in "active negotiations" with the Space Force and is "confident in its ability to successfully deliver our systems ahead of competitors."

March 10, 2026: Alleged Corrective Disclosure. AeroVironment announces third-quarter fiscal 2026 results. The company reports a $179.0 million operating loss, a $151.3 million goodwill impairment in its space division, and reveals the Space Force has terminated the SCAR contract, forcing a recompete. Revenue guidance lowered to $1.85 billion to $1.95 billion. Class period ends. AVAV falls $13.84 (6.24%) to close at $207.73 on March 11, 2026.

March 31, 2026: The U.S. Space Force announces its decision to diversify suppliers and pursue commercial, off-the-shelf solutions for the SCN upgrade, abandoning the single-vendor bespoke model.

Investor Harm and Market Reaction

The complaint alleges AeroVironment investors suffered significant losses across three alleged corrective disclosures. The first blow came on January 20, 2026, when the company disclosed the stop work order on its BADGER contract. AVAV shares plunged $61.97, or 15.77%, to close at $330.89 on the news.

Despite this drop, the complaint alleges the stock remained artificially inflated because defendants continued to represent that AeroVironment expected to deliver capabilities for the SCAR program. The complaint alleges additional inflation was removed on March 2, 2026, when Space News reported that the Space Force was reopening the program to multiple vendors. The stock fell $43.93 per share, or 17.42%, to close at $208.32. Analysts reacted swiftly: Canaccord Genuity cut its price target 17.5% from $400 to $330, Raymond James downgraded the stock from Strong Buy to Underperform citing SCAR uncertainty, and BTIG cautioned that "there was previously little doubt from the company that the program would be recompeted in the first place."

The complaint identifies a further alleged corrective disclosure on March 10, 2026, when AeroVironment disclosed additional SCAR-related financial impacts. The company disclosed a $151.3 million goodwill impairment, lowered fiscal year 2026 revenue guidance to $1.85 billion to $1.95 billion from a prior range of $1.9 billion to $2.0 billion, and confirmed the Space Force had terminated the contract entirely. AVAV fell another $13.84 per share, or 6.24%, to close at $207.73 on March 11, 2026. Needham reduced its price target from $450 to $400, Canaccord Genuity cut again from $330 to $300, and BTIG slashed its target 20.4% from $415 to $330, citing a "disappointing . . . SCAR termination." The company also disclosed that approximately $1.5 billion of its $3 billion unfunded backlog related to SCAR and that it expected an adjustment tied to the customer’s intent to terminate for convenience.

Litigation & Procedural Posture

The complaint asserts claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against all defendants, and under Section 20(a) of the Exchange Act against the Individual Defendants as controlling persons of AeroVironment.

The defendants include AeroVironment, Inc. and three individual executives: Wahid Nawabi, who served as President, CEO, and Chairman of the Board; Kevin P. McDonnell, who served as Chief Financial Officer; and Mary Clum, who served as President of the company's Space, Cyber and Directed Energy business segment.

Scienter allegations center on the Individual Defendants' positions of authority, their access to non-public information about the SCAR program's status, and their direct communication with the U.S. Space Force customer. The complaint specifically alleges that defendants referenced being "shoulder-to-shoulder" with the Space Force and were therefore aware of the significant risk that the single-vendor contract would be terminated in favor of a multi-vendor acquisition model. Additionally, during the class period, defendants Nawabi and McDonnell together sold approximately 49,199 shares of AeroVironment stock for over $7.8 million in proceeds, with Nawabi selling 22,669 shares for over $5.69 million and McDonnell selling 26,530 shares for over $1.89 million. No confidential witnesses are cited at this stage of the litigation.

Procedurally, the case was filed on May 26, 2026 and is in its earliest stages. The complaint seeks class certification on behalf of all purchasers of AeroVironment securities during the class period. Lead plaintiff submissions are due by July 27, 2026.

SEC Filings & Risk Factors

The complaint targets a series of SEC filings and public statements through which defendants allegedly presented an incomplete and misleading picture of AeroVironment's prospects under the SCAR program. The core disclosure failure, as alleged, was a systematic omission of the risk that the U.S. Space Force would abandon its single-vendor approach and reopen the SCAR program to competing suppliers.

The complaint cites AeroVironment's fiscal fourth-quarter and full-year 2025 press release issued on June 24, 2025, which provided fiscal year 2026 revenue guidance of $1.9 billion to $2.0 billion, inclusive of projected BlueHalo contributions. This guidance was reiterated in the first-quarter fiscal 2026 earnings release filed on September 9, 2025, with an improved non-GAAP earnings per share outlook. The complaint alleges that neither release disclosed the risk that the SCAR program might be reopened to competition, despite the complaint’s allegation that SCAR was presented as a significant growth driver and later accounted for approximately $1.5 billion of AeroVironment’s $3 billion unfunded backlog.

The second-quarter earnings release, filed via Form 8-K on December 9, 2025, highlighted a newly secured firm-fixed-price contract for two additional BADGER systems under the SCAR program. Management characterized this award as evidence that the program was advancing into production. The filing disclosed no indication that the Space Force was reconsidering its acquisition strategy or that the single-vendor model was at risk. Defendants maintained the same revenue guidance and presented SCAR as a stable, expanding franchise.

Following the January 20, 2026 stop work order, AeroVironment's Form 8-K filed the same day characterized the pause as a mutual agreement allowing for contract renegotiation. The company stated it expected to continue delivering for the SCAR program and anticipated a firm-fixed-price agreement. The complaint alleges this filing was itself misleading because it overstated the likelihood of continued revenues from the program.

The alleged truth was revealed progressively through the March 2, 2026 Space News report, which disclosed the Space Force's intent to pursue a new multi-vendor acquisition strategy, and the March 10, 2026 third-quarter earnings release and Form 8-K. The third-quarter filing disclosed a $151.3 million goodwill impairment in the space division, a $179.0 million operating loss, and a reduction in fiscal year 2026 revenue guidance to $1.85 billion to $1.95 billion. The filing also revealed that approximately $1.5 billion of the company's $3 billion unfunded backlog was attributable to the terminated SCAR contract, indicating the magnitude of SCAR-related backlog that the company expected to adjust.

The complaint further alleges that defendants violated Item 303 of SEC Regulation S-K, which requires disclosure of "known trends or uncertainties" reasonably likely to have a material unfavorable impact on revenues or income. The complaint asserts that the imminent competitive threat to SCAR represented precisely such a known trend, and that defendants' failure to disclose it deprived investors of material information necessary to assess the company's financial prospects. The pattern, as alleged, was one of affirmative promotion of SCAR as an important growth driver, coupled with silence about the concrete risk that the Space Force was reassessing its entire acquisition strategy.

How to Join the AeroVironment (AVAV) Class Action

• Confirm you purchased AVAV shares during the June 25, 2025 to March 10, 2026 class period
• Review the allegations and eligibility requirements in the pending securities class action
• Gather trade confirmations and brokerage records documenting purchases or losses
• Consult counsel regarding lead plaintiff deadlines, eligibility, and recovery rights
• Click here to check eligibility

Disclaimer: Attorney Advertising. This shareholder alert is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for personalized guidance. No specific outcomes are guaranteed.