AVAV Borrow Loosens After Last Week's Squeeze — But Shorts Hold Firm

AeroVironment arrives at its August 17 earnings print in a materially different borrow environment than the one flagged six days ago — availability has rebounded sharply, yet short sellers are not backing away.

The shift since the prior preview is stark. Availability, which collapsed to just 8.4% on August 6 — the tightest reading of the past year — has recovered to 22.9% as of August 12. That is still a tight market by historical standards (fewer than one share available for every four already lent out), but the acute squeeze pressure has clearly eased. Cost to borrow has drifted lower alongside, running at just 0.63%, down roughly 10% on the month. What has not eased is short interest itself: at 8.6% of the free float, it ticked up slightly on the day and remains well above where it was in early July. The ORTEX short score holds at 66.7, barely changed across the past two weeks, signalling persistent but not escalating bearish conviction. Options positioning adds little drama: the put/call ratio of 0.69 is almost exactly in line with its 20-day average, a z-score of just 0.25 — options traders are neither hedging aggressively nor leaning bullish into the number.

The bull and bear debate centres on execution rather than direction. Bulls point to AeroVironment's position in Counter-UAS, a market with genuine and growing government demand, and note that forward EPS estimates have risen sharply over the past year. The consensus sits at a buy rating, and the mean price target of around $232 implies roughly 22% upside from the current $189. Raymond James upgraded to Outperform in mid-July, adding fresh conviction at the top of the analyst stack. Bears, however, have been trimming targets consistently: Citizens lowered its target from $350 to $230 in early July, Canaccord cut from $280 to $240, and RBC downgraded outright to Sector Perform. The shared message across the cuts is that defense budget timing, BlueHalo integration risk, and lumpy contract awards make near-term earnings visibility difficult to model with confidence. On valuation, the stock trades at nearly 49x trailing earnings after a 34% one-month rally — a multiple that leaves little room for a miss.

The historical reaction pattern sharpens the stakes. The most recent earnings event, on July 8, produced a one-day drop of nearly 9% and a five-day loss of 13%. The event before that, on June 29, delivered the opposite: a 20% single-day gain and a 28% five-day rally. The two outcomes could hardly be more different, and they underscore how binary AVAV prints have been. ARK Investment Management added 126,125 shares through July, and BlackRock added 229,475 — both recent enough to suggest institutional appetite for the move higher. But CEO Wahid Nawabi sold 5,246 shares at $144.58 in early July, and the CFO and Chief Accounting Officer sold alongside him, a cluster of insider selling that predates the subsequent rally but remains a data point the market will weigh against the institutional buying.

The August 17 print is therefore a direct test of whether AeroVironment's revenue visibility and margin trajectory can justify a stock that has re-rated sharply higher — and whether the borrow market, now meaningfully looser than last week, has given short sellers enough room to press the trade if the numbers disappoint.