During the August 24 episode of Mad Money, Jim Cramer pointed to the sharp reversal in AEVEX Corp. (NYSE:AVEX) stock as he said:
What the heck happened to a stock we really like, AEVEX? I mean, here’s a company that makes drones for the military, the single hottest part of the defense sector yet, its stock’s been [on] a, let’s call it, a roller coaster. AEVEX came public at $20 back in April, jumped nearly 35% the first day of trading, ultimately running as high as $42 and change a few days later. Now, though, it’s fallen through the offer price, coming down to $18. I can’t find out why.
Some of it’s because AEVEX reported earlier this month, and Wall Street, I guess, didn’t like the numbers. Stock got slammed. Didn’t matter that it was a huge revenue beat. The earnings and backlog both came in weaker than expected, but not that much. Still, I think demand remains strong. They keep winning a lot of new business. At the same time, AEVEX is trying to buy BlackSea Technologies for as much as $650 million in stock and cash, which is a lot of money when you’re a $2 billion company. This would give them exposure to unmanned ships and submarines, which they could tie into their drone software system.
AEVEX’s Increased Revenue in the Second Quarter
AEVEX Corp. (NYSE:AVEX) reported $201.8 million of revenue for the second quarter, up 99.5% from $101.1 million a year earlier. Net income improved to $6.7 million from a loss of $11.8 million, while adjusted EBITDA rose to $28.1 million from $3.6 million. Most of the growth came from AEVEX’s tactical systems business. Revenue in the segment increased to $174.2 million, up 141.6% year over year, driven by higher UAS product and support revenue.
Backlog Decline
AEVEX Corp. (NYSE:AVEX) ended the second quarter with $259.8 million of funded backlog, down from $503.1 million at the end of 2025. That represents a decline of roughly 48%. The company said the $243.3 million decline was primarily due to revenue recognized from the EUCOM AOR Deep Strike program. The company also said the balance was affected by an increase in shorter-cycle customer orders. AEVEX continued to secure new business during the quarter, including contracts for UAS and engineering services, mission-support capabilities, and advanced unmanned mission capabilities.
Furthermore, it announced an additional $41 million U.S. government award on August 20. The contract covers delivery of one-way attack systems. AEVEX also raised its 2026 outlook. Management now expects revenue of $700 million to $720 million and adjusted EBITDA of $105 million to $111.5 million.
Bear Case
The biggest concern is whether AEVEX Corp. (NYSE:AVEX) can sustain growth as major programs mature. Contract timing adds another variable. The company said it experienced elongated award timelines during the first half of 2026, citing changes in Defense Department acquisition personnel and processes, Middle East conflicts, and operational reprioritization. Lastly, BlackSea creates a separate execution risk. The deal could expand AEVEX’s addressable market, but shareholders will need to see sufficient earnings growth from the acquisition to justify the cash outlay, integration risk, and dilution.
Institutional Positioning
Institutional interest provides some support for AEVEX Corp. (NYSE:AVEX). Insider Monkey’s tracking of more than 1,000 hedge funds showed 28 funds holding the stock at the end of the second quarter. As per Morningstar, Inc., the short interest sits at 11.96% of the float. For the bullish thesis to play out, the company needs to keep converting new awards into revenue, replenish backlog as major programs are completed, improve earnings conversion, and show that BlackSea can generate enough incremental value to justify the capital and dilution involved.
If management delivers on those fronts, the decline below the IPO price could eventually look difficult to justify. If it does not, the stock’s weakness may prove to be less about the outlook for military drones and more about AEVEX’s ability to turn strong demand into durable, profitable growth.
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