AAON Plummets 11.3% Amid Operational Turmoil: Can the HVAC Giant Rebound?

Summary
• AAON’s stock nosedives 11.3% to $71.39, erasing nearly half its 52-week high of $144.07
• Q2 earnings miss estimates with GAAP EPS of $0.19, down 69.4% YoY
• CEO admits ERP implementation and supply chain bottlenecks crippled production
• Backlog surges 71.9% to $1.12B, signaling long-term demand resilience

AAON’s dramatic intraday plunge reflects operational chaos from ERP rollout and supply chain disruptions, yet robust backlog hints at potential recovery. Traders now weigh short-term pain against long-term promise as the stock trades near its 52-week low of $62.00.

ERP Chaos and Supply Constraints Trigger Sharp Selloff
AAON’s 11.3% decline stems from operational inefficiencies tied to its ERP system implementation and supply chain bottlenecks. Q2 results revealed a 0.6% sales drop to $311.6M, with GAAP EPS collapsing 69.4% to $0.19. The CEO candidly admitted the ERP rollout at Longview, Texas, caused production halts, coil shortages, and $3.4M in one-time costs. Gross margins contracted 1,120 bps to 14.9%, while SG&A expenses spiked 19.0% of sales. Despite $1.12B in backlog, investors punished near-term execution risks, though management’s confidence in sequential production improvements offers a glimmer of hope.

Building Products Sector Mixed as Lennox (LII) Slides 0.95%
Bearish Playbook: Capitalizing on Volatility with AAON20250815C70 and AAON20250919P70
• 200-day MA: $100.69 (well below current price)
• RSI: 60.44 (neutral but bearish bias)
• MACD: 0.906 (bullish) vs. signal line 0.580 (bearish divergence)
• Bollinger Bands: Price at $71.39 (near lower band at $73.08)

Technical indicators suggest a short-term bearish bias amid oversold conditions. Key support levels at $75.21 (30D) and $81.44 (200D) could trigger further declines if production bottlenecks persist. The options chain reveals two high-conviction plays:

• AAON20250815C70
- Strike: $70, Expiry: 8/15
- IV: 64.23% (elevated volatility)
- Delta: 0.589 (moderate sensitivity)
- Theta: -0.505 (rapid time decay)
- Gamma: 0.0729 (responsive to price swings)
- Turnover: 21,742 (liquid)
- Leverage: 26.78% (moderate gearing)
- Payoff (5% downside): $2.50 (max(0, 67.82 - 70) = $0; breakeven at $70.50)
- Why it works: High IV and gamma make this call ideal for a sharp rebound if production improves.

• AAON20250919P70
- Strike: $70, Expiry: 9/19
- IV: 45.36% (reasonable)
- Delta: -0.423 (moderate bearish exposure)
- Theta: -0.0196 (slow decay)
- Gamma: 0.0367 (stable)
- Turnover: 22,928 (liquid)
- Leverage: 19.66% (balanced risk)
- Payoff (5% downside): $2.50 (max(0, 70 - 67.82) = $2.18; breakeven at $70.50)
- Why it works: Lower IV and theta make this put a safer bet for a prolonged bearish move.

Action: Aggressive bulls may chase AAON20250815C70 into a rebound above $73.08 (Bollinger lower band). Cautious bears should target AAON20250919P70 if $70 breaks with volume.

Backtest Aaon Stock Performance
AAON Inc. experienced a significant intraday plunge of -11% on August 11, 2025, following the release of its Q2 2025 earnings results. The stock's performance after the plunge can be evaluated based on the following points:1. Post-Plunge Performance: The stock's reaction after the -11% drop was a sharp decline, hitting a 52-week low of $62.65. This indicates a strong negative reaction from the market, reflecting investor disappointment in the company's performance and guidance.2. Market Sentiment: The stock's decline represents a reversal from Q1 2025, when AAON exceeded analyst expectations with an adjusted EPS of $0.37 versus the forecasted $0.24. The Q2 results marked a significant downturn, with reported EPS dropping to $0.22, missing non-GAAP EPS expectations by 33.3%.3. Valuation and Fundamentals: Despite the stock's decline, AAON maintains strong fundamentals, as indicated by a 'GOOD' financial health score and a consistent dividend history of 20 consecutive years. This suggests that while the market may be reacting negatively to short-term operational challenges, the company's underlying value could be deemed solid by some investors.4. Recovery Prospects: The company's future outlook appears mixed. While the Q2 performance was severely impacted by the ERP system rollout, AAON reported a robust 71.9% year-over-year increase in order backlog, reaching $1.12 billion. This strong backlog could foreshadow a potential recovery in the second half of 2025, especially as operational improvements are expected.In conclusion, AAON's stock performance after the -11% intraday plunge has been characterized by a sharp decline to a 52-week low, reflecting immediate market disappointment. However, the company's fundamentals and the potential for recovery in the future could influence a gradual shift in investor sentiment.

Rebound or Reckoning? Watch for $70 Breakdown and Production Clarity
AAON’s selloff reflects near-term operational pain but not long-term demand destruction. With $1.12B in backlog and CEO Matt Tobolski’s pledge to operational excellence, the stock could rebound if production normalizes. However, a breakdown below $70 would validate bearish sentiment. Traders should monitor the AAON20250919P70 put for a 5% downside scenario and watch Lennox (LII) at -0.95% for sector cues. For now, the path of least resistance is lower—until production metrics prove otherwise.