PAGE STEPHEN F sold $38K of AVAV (indirect holdings)

Adm. Daryl Caudle, the Navy's top officer, advocates for directed energy weapons to counter cheap drones, citing cost imbalances. The Navy is investing in laser systems, with Lockheed Martin's HELIOS and other projects in development. The Pentagon awarded $86M to nLIGHT Defense and Lockheed Martin for laser weapon systems, aiming for 150-500 kilowatts of power. The Army has also used laser systems to neutralize drones, marking real-world applications.

The Pentagon selected four directed-energy systems, including AeroVironment's (AVAV) and Boeing's (BA) lasers, for testing at five U.S. military bases starting in 2026. The systems will be evaluated for a year to assess their effectiveness against drone threats. The Pentagon has allocated billions for counter-drone defenses, with directed-energy weapons costing significantly less per engagement than traditional interceptors.

The U.S. Army aims to deploy its first high-energy laser counter-drone weapon by early 2028, with testing and training ongoing. AeroVironment received a $464.8M contract for the LOCUST X3 system, expected to be delivered by Q4 2027. The Army demonstrated successful kills using a prototype in October, highlighting the system's modularity and potential for field-level maintenance.

Ondas (ONDS) shares fell 5% to $6.86, despite $270M in new defense orders and recent acquisitions. AeroVironment (AVAV) dropped 1%, while Kratos (KTOS) rose 0.4%. The Defiance Drone ETF (JEDI) declined 3%. Ondas' growth relies on acquisitions and order conversions, raising concerns about execution and production scaling.

AeroVironment (AVAV) secured a $50M international order for its LOCUST Laser Weapon System, marking its first direct commercial sale. The company also received a $464.8M U.S. Army contract for E-HEL systems. It plans to invest $30M to expand its Albuquerque facility. Potential risks include regulatory hurdles and production scaling challenges.

AeroVironment (AVAV) stock is down 43% this year, partly due to an $89M goodwill error and a lawsuit. Peers Kratos (KTOS) and Red Cat (RCAT) also fell, while defense ETF JEDI and SPY rose. Investors weigh whether the decline is company-specific or sector-wide.