The Bot Brief

"There is no force on earth more powerful than an idea whose time has come."       

- Victor Hugo

Bots in the News:

Despite protestations from Treasury Secretary Janet Yellen regarding the advent of an economic slowdown, the investment community viewed last week’s employment picture as a potential recession specter. The current jobs picture appears grim and the significant downward revisions to historic reports drove investors to the sidelines. Consequently, the major markets were all down for the week, with the S & P 500 off 4.25% and the Bot Index collapsed 5.87%. In general, the market experienced its worst week since 2023.

The Bot Index held five companies that had double digit declines for the period. The worst drop was noted by perennial downer, iRobot who fell 18.44% as investors continue to question its viability following the Amazon takeover withdrawal. The well-documented decline by NVIDIA Corp. from its summer heights continued with another 13.87% slide. Oceaneering International followed the recent decline in oil prices and fell 12.56% and 3D Systems slid another 12.15%.

AeroVironment, however, declined nearly 12% following its earnings release. According to Zachs Investments, “AeroVironment came out with quarterly earnings of $0.89 per share, beating the Zacks Consensus Estimate of $0.61 per share. This compares to earnings of $1 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report presents an earnings surprise of 45.90%. A quarter ago, it was expected that this maker of unmanned aircrafts would post earnings of $0.21 per share when it actually produced earnings of $0.43, delivering a surprise of 104.76%.”

This week, the company reported it had obtained a $990 million contract from the Pentagon. The magnitude of the order represents a 38% increase over the entire revenues for fiscal 2024. That translates to at least $.59 incremental cents per share over the next few years. The contract is likely for the company’s unique loitering drone – Switchblade, which offers battlefield superiority. It will be interesting to witness the impact on the stock next week, whether investors will view the contract sufficiently to support the company’s 80 plus multiple.

There was only one company that showed a gain for the week and that was based upon NIO Corp.’s recent second-quarter earnings announcement. The company reported an almost doubling of its revenue and an improvement in earnings over the prior year. The low-priced stock gained 24%.

Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association (now A3 Automation), Member IEEE.

The Bot Brief is a weekly newsletter designed for economists, investment specialists, journalists, and academicians. It receives no remuneration from any companies that may from time to time be featured in the brief and its commentaries, analysis, opinions, and research represent the subjective view of Balcones Investment Research, LLC. Due to the complex and rapidly changing nature of the subject matter, the company makes no assurances as to the absolute accuracy of the material presented.

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