Red Cat Holdings, Inc.

Key Points
Geopolitical conflicts are accelerating the need for cheap combat drones.
Experts estimate that the global drone market will more than double over the next decade.
The U.S. government is investing heavily in domestic drone production, including a $1 billion program aimed at reducing reliance on foreign suppliers and scaling low-cost military drones.
The global drone market is soaring to new heights and is projected to more than double from $69 billion to $148 billion by 2036, according to business research firm IDTechEx. This explosive growth is being driven by geopolitical conflicts around the world, which have showcased the undeniable impact of low-cost drones.
The ongoing war between Ukraine and Russia has served as a demonstration of how drones have evolved from niche tools into dominant forces. With combat drones costing a few thousand dollars, Ukraine has proved that these aerial machines can neutralize multimillion-dollar tanks and armored vehicles.
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For investors seeking exposure to the growing drone industry, Red Cat Holdings (NASDAQ: RCAT) and Kratos Defense & Security Solutions (NASDAQ: KTOS) are two drone stocks that stand out. Here's why.
The U.S. is aggressively expanding its drone program
As part of the U.S.'s efforts to "Unleash American Drone Dominance," the Pentagon has initiated a $1.1 billion program to mass-produce and field thousands of cheap drone systems costing between $3,000 and $5,000 to eliminate reliance on foreign sources and effectively counter adversaries.
As part of the program, the U.S. government is taking a new approach to how the military buys technology, shifting away from a slow bureaucratic contracting process toward merit-based field trials. The goal is to create a high-stakes testing ground where commercial manufacturers must prove the effectiveness of their drones in combat and their ability to scale to survive.
The program features "gauntlets" spread across four phases, which put manufacturers' equipment to the test in real-world battle scenarios. Here, drones are put into the hands of active-duty military pilots and front-line operators, who are given two hours to learn the systems and master controls before putting them into live simulated combat scenarios.
The first gauntlet was run in February this year and featured 25 companies. In addition, the phase two qualifier was held in Camp Grayling, Michigan, where 49 companies were tested for day and night navigation under complex radio-jamming and electronic warfare conditions.
Red Cat is moving forward in the drone dominance gauntlets
Red Cat's subsidiary, Teal Drones, was one of the companies selected to move on to the next phase of the gauntlet challenges. With its advancement, the company is the only publicly traded, pure-play drone stock that remains standing as part of the challenge.
Up next for Red Cat is proving it can manufacture and deliver 120 combat-ready kamikaze drones in a tight five-week window before the next gauntlet challenge at Fort Carson, Colorado, in August.
Kratos specializes in high-tech AI-powered drones
Kratos Defense was another company participating in the gauntlet challenges. However, the challenge's design favored agile companies with optimized supply chains built to deliver low-cost tactical drones quickly, and the company was eliminated after the phase two qualification stage.
But it's not over for Kratos by any means. The company specializes in high-end collaborative combat aircraft. Its XQ-58A Valkyrie is an AI-controlled autonomous aircraft that flies alongside manned fighter jets like the F-35. These units cost millions of dollars each and have large profit margins that smaller drone start-ups cannot compete with.
In January, the U.S. Marine Corps selected Kratos and partner Northrop Grumman to develop this wingman drone, which serves several roles, including conducting scout missions, absorbing enemy fire, jamming radar systems, and engaging enemy targets. And at a cost of $3 million to $4 million, it's drastically cheaper than an $80 million to $100 million F-35 fighter jet.
These two stocks provide investors with exposure to the growing drone industry
For investors seeking exposure to a pure-play drone start-up, Red Cat is emerging as an appealing option. But bear in mind that the stock carries significant risk, as it still has to navigate through the gauntlet of challenges ahead while spending big to scale up its manufacturing capabilities.
Kratos is a more established player with exposure to drones and other defense technologies, including infrastructure, software, electronic warfare, and propulsion systems across defense sectors. The company also faces high cash spend as it expands its facilities, but it has promising upside with its multibillion-dollar backlog.
As geopolitical tensions remain high and new technologies emerge, warfare is evolving, and the drone market is one area of rapid growth. For aggressive investors looking to capitalize on that long-term growth, Red Cat and Kratos are two drone stocks to invest in today.
Should you buy stock in Red Cat right now?
Before you buy stock in Red Cat, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Red Cat wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $369,577!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,301,557!*
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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kratos Defense & Security Solutions. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Want Exposure to the Fast-Growing Drone Market? Buy These 2 Stocks.

An updated edition of the May 27, 2026 article.
The global drone technology market is entering a new phase of accelerated adoption, driven by technology advancements and expanding usage in commercial applications.
The embedding of AI has made modern drones faster and more versatile than ever. AI incorporation is driving the autonomous navigation functionality of drones, enabling them to autonomously plan their flight paths based on real-time data, such as environmental terrain. The integration of 5G and advanced Wi-Fi technology has improved real-time data transmission, expanding commercial applications.
Consequently, drones are now becoming indispensable across various industries. Drones have become integral to various sectors like mining, infrastructure monitoring, real estate, oil and gas exploration, and even filmmaking. From aerial photography and agricultural mapping to data collection and operations across sectors, drones are transforming how businesses operate. Drones are gaining momentum in last-mile delivery operations as companies look to cut operational costs and enhance productivity.
Retail behemoths like Walmart and Amazon are increasingly deploying drones in logistics. Amazon uses drone delivery to deliver one package (up to five pounds) in less than an hour during daylight hours. Meanwhile, public safety and disaster response sectors are using drones for surveillance and search-and-rescue missions. The usage of drone swarms is being extensively explored for tasks like large-area surveillance and search-and-rescue.
Still, the defense segment continues to serve as the key growth engine. The growing geopolitical strains and defense upgrades are driving increased drone adoption worldwide. Globally, drones are now being widely deployed for border security, precision strikes, intelligence, surveillance, and reconnaissance (“ISR”) and other tactical operations, making them indispensable assets in modern warfare.
With regulatory frameworks evolving and military and commercial adoption gaining pace, the drone sector has a long runway for growth. The drone market is expected to witness a CAGR of 9.34% from 2026 to 2031, according to a report from Mordor Intelligence.
If you are looking to capitalize on this trend, our Drone Technology Screen makes it easy to identify high-potential stocks, such as Red Cat Holdings RCAT, RTX Corporation RTX and Ondas Inc ONDS.
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3 Drone Tech Stocks in Focus
Red Cat Holdings specializes in robotic hardware-software integration for applications for military and commercial uses. Teal Drones and FlightWave Aerospace are two of its wholly-owned affiliates. Its portfolio also includes Black Widow (small, unmanned aircraft systems), TRICHON (a hybrid VTOL) and FANG, an NDAA-compliant FPV drone. It recently introduced Hellcat, a dual-use small unmanned aircraft system based on the Black Widow platform.
On the lastearnings call management highlighted that the Defense Autonomous Warfare Group is expected to allocate $54 billion (which could reach as much as $74 billion) toward drones, drone dominance and counter-drone systems starting in 2027, with funding visibility beginning within months. Additionally, a $156 billion defense reconciliation bill for 2025 is now being rapidly deployed in 2026, with only $30 billion obligated as of April, implying a significant ramp in spending over the near term. This creates a powerful demand tailwind for RCAT’s portfolio.
Given these, the company expects $150-$180 million in annual revenues in the near to medium term. The gross margins are expected to approach 30% over time. Red Cat delivered $15.5 million in revenues in the first quarter, marking an 849% year-over-year increase.
Earlier this month, RCAT announced that Teal Drones has moved to Gauntlet II of the Drone Dominance Program.
RCAT’s expansion into USVs via Blue Ops adds a significant new revenue stream with an expected $150 million sales potential in 2026. It recently acquired Quaze Technologies Inc, which specializes in wireless power transfer technology for unmanned and autonomous systems. RCAT carries a Zacks Rank #2 (Buy) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
RTX Corporation is a major aerospace and defense player and represents a more diversified way to enhance exposure to the drone technology space. The company delivers advanced systems and services for commercial, military, and government clients through its Collins Aerospace (Collins), Pratt & Whitney and Raytheon business segments.
Its exposure to the drone market is primarily driven by its strength in counter-drone systems. On the lastearnings call RTX emphasized that the current geopolitical landscape is driving increased demand for munitions, integrated air and missile defense technology, and advanced capabilities to deal with threats. Management highlighted the increasing demand for its Coyote counter-UAS system.
It has demonstrated a non-kinetic version of the Coyote, which reflects the industry’s shift toward more cost-effective and reusable systems. Unlike traditional interceptors, this version can complete a mission, return, be recharged, and redeployed, making it well-suited for sustained operations.
The company noted strong global interest, including a recently approved Coyote system deal with the UAE, underscoring the export potential of its C-UAS portfolio. RTX currently carries a Zacks Rank #2.
Ondas is rapidly scaling its Ondas Autonomous Systems (“OAS”) business, which has quickly become a multi-domain autonomy platform spanning ISR, C-UAS, loitering munitions/strike systems, unmanned ground vehicles and stratospheric sensing via World View acquisition.
The company has accomplished this broad portfolio through focused M&A activity. The company recently announced the acquisition of DZYNE Technologies for $875.8 million. DZYNE will expand ONDS’ reach across c-UAS, multi-domain ISR, precision strike and mission intelligence and autonomous systems. Both World View and DZYNE will operate within the company’s newly launched business division, Ondas Sentinel.
Following this development, Ondas now expects 2026 revenue to be at least $525 million from the previous forecast of $390 million. The increase also reflects contributions from Omnisys. DZYNE is expected to contribute approximately $191 million in revenue in 2026 and more than $300 million in 2027.
In June 2026, ONDS announced the $125 million acquisition of Cyberhawk, a provider of drone-based infrastructure inspection and AI-powered asset intelligence.
Beyond these acquisitions, the company had completed five acquisitions (World View, INDO Earth, Rotron Aerospace, Bird Aero and Mistral Inc) alone in the first quarter of 2026. In the past year, it has acquired Sentrycs, Apeiro Motion and Zickel, among others. Ondas now operates in more than 45 countries with over 1,000 employees globally.
However, extensive M&A amplifies risks, as so many acquisitions in such a short period can create integration overload and execution risks, as achieving targets depends on timely integration and conversion of backlog into revenues. ONDS carries a Zacks Rank #3 (Hold) at present.
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3 Drone Tech Stocks to Keep an Eye on as Adoption Picks Up Pace

One of Draganfly’s DPRO biggest competitive advantages is its portfolio of National Defense Authorization Act (NDAA)-compliant drone platforms. The U.S. NDAA prohibits federal agencies from purchasing or operating drones manufactured by certain Chinese companies or containing restricted components due to cybersecurity and national security concerns. As a result, government agencies and contractors are actively seeking trusted alternatives that meet these procurement requirements.
Draganfly designs and manufactures drone systems that meet these compliance standards while serving defense, public safety, inspection, agriculture, and emergency response markets.
DPRO’s North American operations further strengthen its positioning. Unlike manufacturers that rely heavily on overseas supply chains, Draganfly has built manufacturing, engineering, and support capabilities within Canada while serving customers throughout the United States. This localized approach improves supply-chain resilience and shortens delivery timelines.
Federal, state, and local agencies are gradually replacing aging drone fleets that no longer meet evolving security standards. Critical infrastructure operators, utilities, energy companies, and public safety organizations are also placing greater emphasis on trusted drone suppliers that can provide secure hardware, software, and long-term technical support. As this replacement cycle unfolds, demand for NDAA-compliant drone platforms could continue growing over the next several years.
Draganfly's expanding defense relationships further reinforce this opportunity. During the first quarter of 2026, the company continued building momentum through collaborations with the U.S. Air Force Special Operations Command while advancing AI-powered autonomous flight capabilities through its partnership with Palladyne AI. These developments not only validate the company's technology but also strengthen its credibility with future government and enterprise customers.
North American Drone Manufacturers Positioned to Benefit
Several North American drone manufacturers are leveraging domestic production and secure technologies to capture growing government demand.
AeroVironment AVAV remains one of the largest beneficiaries of U.S. defense spending, supplying tactical unmanned aircraft systems and loitering munitions to the Department of Defense and allied nations. Its long-standing military relationships provide a significant competitive advantage as defense budgets continue expanding.
Red Cat Holdings RCAT has positioned itself as a provider of U.S.-made drone systems for military and public safety applications. Through its expanding portfolio of NDAA-compliant platforms, the company aims to capture opportunities created by the Department of Defense's increasing preference for secure domestic suppliers.
DPRO Stock’s Earnings Estimates
The Zacks Consensus Estimate for 2026 earnings per share implies an increase of 48% year over year.
Image Source: Zacks Investment Research
DPRO Stock Trades at a Discount
In terms of valuation, DPRO’s forward 12-month price-to-sales (P/S) is 0.88X, a discount to the industry’s average of 2.62X.
Image Source: Zacks Investment Research
DPRO Stock’s Price Performance
In the past three months, the company’s shares have risen 16.7% compared with the industry’s 3.9% growth.
Image Source: Zacks Investment Research
DPRO’s Zacks Rank
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Can Draganfly Benefit From North America's Drone Supply-Chain Shift?

Key Points
The Pentagon has launched a $1.1 billion initiative aiming to boost the U.S. domestic drone industry.
Red Cat Holdings is one of the companies competing in the gauntlet challenges as part of this program.
The company has issued a significant amount of stock as it scales up.
Last year, the Pentagon announced a $1.1 billion program to unleash American drone dominance. This program builds on the lessons learned from Ukraine's ongoing conflict with Russia, as the rules of warfare continue to evolve with modern technology.
Related to this change, one company that has come onto investors' radars is Red Cat Holdings (NASDAQ: RCAT). The company has positioned itself as a U.S.-based drone company and is competing for major defense contracts. Is this enough to make the drone stock a buy right now? Let's dive in and explore its long-term potential.
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The Pentagon's Drone Dominance Program put Red Cat on the map
Red Cat stock has been volatile thus far, rising as high as $18 per share amid growing U.S. military support for drones, only to fall 48% in recent weeks. The company has ridden the wave of interest for drone companies, and Red Cat has pivoted into a pure-play, defense-oriented hardware and software provider through its subsidiaries Teal Drones, FlightWave Aerospace, and Blue Ops.
The stock's rise is attributed to the Pentagon's aggressive investments in drone technology as modern warfare evolves. As part of this, the Department of Defense launched a $1.1 billion Drone Dominance Program to field 200,000 low-cost, domestically produced uncrewed aerial systems by 2027.
The program aims to build up the United States' domestic drone-making capabilities, focusing on driving drone costs down to around $2,000 per system in the long run. The National Defense Authorization Act (NDAA) prohibits the Department of Defense from purchasing Chinese-made drones or drones containing critical Chinese components, due to concerns about reliance on a foreign country's supply chain and potential data leakage.
In the Drone Dominance Program, Red Cat has emerged as a formidable competitor. As part of the program, drone manufacturers are undergoing a series of "gauntlets," or high-end competitions to test drones in real-world applications. Red Cat's subsidiary, Teal Drones, advanced to become one of 12 finalists competing for a share of an initial $150 million allocation to supply 30,000 low-cost strike units.
Beyond this, Red Cat is seeing strong international demand for its drones from allies, including NATO and the Japanese Ministry of Defense. In the first quarter, Red Cat generated a record $15.5 million, an 849% year-over-year increase, thanks to deliveries of its Black Widow and Edge 130 platforms.
Red Cat's growth has come at a cost to its investors
Red Cat is enjoying tailwinds from demand for domestic drone manufacturers, and is working to scale up. However, this has come at the expense of existing shareholders, as the company issues stock to fund acquisitions and expanded operations.
Since the start of 2025, the company's shares outstanding have grown from 85.6 million to 121.8 million by the end of the first quarter. The company announced another $225 million public equity offering in May, selling 23.9 million shares at a $9.40 per share. For investors, the equity offering highlights the risks of investing in early-stage start-ups, as these companies incur substantial expenses to grow.
Red Cat is carving out a niche as a pure-play stock in the combat drone sector, offering long-term upside potential. However, the company is still scaling up and burning cash, and I'd like to see its high-profile military contract awards translate into recurring orders and improved margins before seriously considering investing in this drone stock.
Should you buy stock in Red Cat right now?
Before you buy stock in Red Cat, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Red Cat wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $382,359!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,201,390!*
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*Stock Advisor returns as of June 27, 2026.
Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Is Red Cat Holdings a Top Drone Defense Stock to Buy Right Now?

Key Points
Red Cat stock slipped today despite bullish trading for the broader market.
Investors are betting that a deal to end the Iran war could finally be finalized in the near future.
SpaceX's IPO pulled investment dollars out of some other stocks.
Red Cat (NASDAQ: RCAT) stock lost ground in Friday's trading despite a backdrop of positive momentum for the broader market. The company's share price fell 6.9% in a session that saw the S&P 500 rise 0.5% and the Nasdaq Composite rise 0.3%.
There wasn't any negative business-specific news for Red Cat today, but the company's valuation moved lower as investors reacted to geopolitical news and made portfolio adjustments connected to SpaceX's initial public offering (IPO). While the stock has recently seen a substantial valuation pullback, it's still up 41% in 2026.
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Iran war news appears to have been a negative catalyst for Red Cat
Following recent news suggesting that the Iran war could be poised for reescalation, new reports suggest that a deal to end the conflict could finally be forthcoming. While an end to the war would be a bullish development for the broader market, it could also dent positive momentum for defense stocks.
SpaceX's IPO also created valuation pressures for Red Cat
SpaceX went public today, and its stock gained 19.2% in its first day of trading. The company set valuation and fundraising records for an IPO, and it closed out the day with a market capitalization of roughly $2.11 trillion.
While SpaceX's successful IPO created positive valuation trends for the market at large, it actually coincided with pullbacks for many space tech and next-generation defense stocks. With investors pulling money out of other growth-dependent plays in order to fund investments in SpaceX, Red Cat's valuation was under pressure today.
Should you buy stock in Red Cat right now?
Before you buy stock in Red Cat, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Red Cat wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $438,283!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,257,427!*
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Why Red Cat Stock Sank Today

Key Points
The Ukraine-Russia conflict has highlighted the effectiveness of drones in modern warfare.
The U.S. aims to boost domestic drone manufacturing through programs like the Pentagon's $1.1 billion Drone Dominance Program.
Red Cat Holdings and Unusual Machines are two companies poised to benefit from rising spending on drones and related technologies.
Drones are becoming increasingly important for national security and defense. In Ukraine's conflict with Russia, low-cost drones have proven useful for both offensive and defensive attacks. The U.S. is taking notes and making a massive push to boost its domestic drone manufacturing ability, as highlighted by the Pentagon's $1.1 billion Drone Dominance Program.
This push could provide a strong tailwind for Red Cat Holdings (NASDAQ: RCAT) and Unusual Machines (NYSEMKT: UMAC), which play key roles in U.S. domestic drone production. With defense budgets slated to grow, these two companies stand to benefit. But which drone stock is a better buy right now? Let's dive into the different business models and growth prospects to find out.
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Domestic drone production has become a national security priority
U.S. regulators are making a strong push to diversify supply chains for crucial materials and other products central to national security away from China. As part of last year's National Defense Authorization Act (NDAA), U.S. defense contractors cannot use Chinese sources for drones or related components, creating an opportunity for U.S.-based companies like Red Cat and Unusual Machines.
While the two companies operate in the drone industry, there are some important differences to consider. Red Cat manufactures tactical, unmanned aircraft systems (UAS) equipped with artificial intelligence (AI) for government and commercial customers, and its flagship products include the Teal 2 and Black Widow, both of which are reconnaissance battlefield drones. The company also manufactures the FANG, an NDAA-compliant first-person view (FPV) drone used for military and tactical strike operations.
Unusual Machines doesn't manufacture drones itself. Instead, the company supplies components to Red Cat and other drone manufacturers. As an original equipment manufacturer, Unusual Machines builds the underlying hardware for drones, including things like FPV goggles, motors, and electronic speed controllers.
Red Cat and Unusual Machines have some history. In 2024, Red Cat divested from some of its consumer-focused businesses, which were sold and eventually formed Unusual Machines. The move enabled Red Cat to focus solely on defense and military drone technology, while Unusual Machines has grown into a supplier of these key components. Last year, Unusual Machines agreed to design and manufacture customer drone motors and components for Red Cat.
Which drone stock is right for you?
Red Cat is a direct supplier of military hardware to the Pentagon. Earlier this year, the company's subsidiary, Teal Drones, was among 25 vendors invited to participate in the Pentagon's competitive field trials in Georgia as part of its $1.1 billion drone program.
The company emerged as one of 12 finalists from these field trials, positioning itself to receive a share of the $150 million allocated by the U.S. for its initial 30,000 low-cost attack drone units. Looking ahead, there will be three additional gauntlets, with the number of suppliers ultimately whittled down to five by early 2027.
Unusual Machines, on the other hand, is a pick-and-shovel play for the drone industry. While it doesn't manufacture its own drones, it provides the necessary components for drone manufacturers. In addition to Red Cat, the company also works with Dynamic Aerospace Systems and Performance Drone Works, giving it exposure to the broader expansion of the drone industry.
Buying Red Cat today is an investment in the company and a belief that it can win large government contracts, while buying Unusual Machines could offer greater upside and is more of a bet on the broader expansion of the drone industry. Both stocks carry risk, as both businesses are currently cash-burning operations and analysts project they will continue to post net losses through 2028.
Should you buy stock in Red Cat right now?
Before you buy stock in Red Cat, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Red Cat wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $439,038!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,277,804!*
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*Stock Advisor returns as of June 10, 2026.
Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Red Cat Holdings vs. Unusual Machines: Which Drone Stock Is a Better Buy Today?

Key Points
Red Cat will participate in a $742,000 Army landmine-detecting contract.
Investors probably hoped the contract would be bigger, and are disappointed today.
Easy come, easy go, easy go... down even more.
Three weeks ago, investors in Red Cat Holdings (NASDAQ: RCAT) stock got encouraging news when it announced it would team up with artificial intelligence company Safe Pro Group to bid on a U.S. Army contract to detect landmines and other threats on the ground, by flying over them with AI-equipped Black Widow drones.
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One week ago, the news got even better when Red Cat announced that it had won the contract. There was just one problem: No one knew how much the contract was worth, or exactly how good the news would be for Red Cat.
Today we know. And Red Cat stock is falling 11.9% through 12:35 p.m. ET.
Bad news for Red Cat
In a press release yesterday, Red Cat partner Safe Pro confirmed that it has just executed a $742,000 contract with the Army to deliver Red Cat Black Widow drones equipped with Safe Pro's "AI Edge Processing NODE" for translating digital imagery into threat analysis.
Let me repeat that:
The big contract win that was supposed to turn Red Cat stock into the cat's meow is worth less than $1 million -- and that money has to be split between Red Cat and its partner Safe Pro.
What it means for Red Cat
Don't get me wrong. $742,000 is better than a sharp stick in the eye. But it's not much next to Red Cat's $54.6 million in trailing revenue -- and it will look smaller still once split with Safe Pro. While there's still potential for this contract to grow as the Army gets more comfortable using the drones and AI software, for the time being, it's pretty small beans.
This, in a nutshell, is why Red Cat stock is going down.
Should you buy stock in Red Cat right now?
Before you buy stock in Red Cat, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Red Cat wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $445,672!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,280,566!*
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Why Did Red Cat Stock Drop Today?

Key Points
The war in Ukraine highlighted the effectiveness of low-cost drones, prompting the Pentagon to initiate a $1.1 billion Drone Dominance Program.
Red Cat Holdings, through its subsidiary Teal Drones, was selected in the early stages of these trials for further evaluation.
Management projects Red Cat's production footprint can support up to $1 billion in revenue.
Technological advances mean modern warfare is constantly evolving. In Ukraine's war with Russia, the country has effectively used low-cost drones that are rewriting the book on warfare. Learning a lesson from this, the Pentagon launched a $1.1 billion Drone Dominance Program in December 2025 to procure and deploy hundreds of thousands of low-cost, one-way attack drones.
The U.S. aims to manufacture drones domestically so it is not reliant on foreign countries that could potentially cut off supply, and Red Cat Holdings (NASDAQ: RCAT) is emerging as an up-and-coming player in the drone industry. Here's what investors need to know about this drone start-up and if it's a good investment today.
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Red Cat is among the top contenders in the Pentagon's Competitive Drone Trials
Red Cat provides drone and robotic systems for military and commercial applications and has updated its supply chain in recent years to comply with the National Defense Authorization Act (NDAA), meaning it doesn't use any Chinese sources to manufacture its drones. When the Pentagon launched its drone program last December, Red Cat fast-tracked the development of its FANG F7 ultra-low-cost FPV strike drone, designed as an inexpensive alternative to traditional missiles.
As part of the Drone Dominance Program, military operators first field and score drones in combat-readiness trials, which it calls "gauntlets." Red Cat's subsidiary, Teal Drones, was among the initial group of 25 vendors invited to participate in the program's competitive field trials in Georgia.
Red Cat emerged as one of 12 finalists from these field trials, positioning itself to receive a share of the $150 million in U.S. funding for its initial 30,000 low-cost attack drone units. From here, there will be three additional gauntlets, where the number of suppliers will ultimately be whittled down to five by early 2027.
Rising defense spending could be a powerful tailwind for Red Cat
Red Cat is emerging as a leading provider of unmanned aircraft systems (UAS) and unmanned surface vessels (USV), offering technology for both air and water environments. The company is growing rapidly, with revenue of $15.5 million, growing 849% from the same quarter last year. Management is also guiding for $150 million to $180 million in revenue this year, representing 300% growth from last year.
Red Cat should benefit from the rapid growth in drone demand, especially as geopolitical tensions remain high and defense spending continues to ramp up. As for manufacturing, the company's production footprint can build enough product to generate $1 billion in revenue.
With modern warfare constantly evolving, Red Cat is an early-stage defense contractor with significant long-term upside potential.
Should you buy stock in Red Cat right now?
Before you buy stock in Red Cat, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Red Cat wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $449,393!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,366,006!*
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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The Pentagon Is Spending $1.1 Billion on Drone Dominance. Does That Make Red Cat Holdings a Buy?

Key Points
Safe Pro and Red Cat have won an Army contract for landmine-detecting drone aircraft.
No contract value was announced.
It's been two weeks now since Red Cat Holdings (NASDAQ: RCAT) stock announced its big plan to collaborate with drone software company Safe Pro Group in a U.S. Army exercise to identify landmines, unexploded cluster munitions, and "ambush FPV drones" from the air. Two weeks later, we just learned that this demonstration was a success -- and Safe Pro has won a contract that it will share with Red Cat.
Not that you would guess it from today's stock prices. Both Safe Pro and Red Cat shares are down, with Red Cat yowling for an 8.8% loss through 11:40 a.m. ET -- reversing yesterday's tiny 0.7% gain after the contract was first announced.
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What stepped on Red Cat's tail?
Why is Red Cat stock reacting negatively to what sounds like positive news?
This technology works by having a Red Cat Black Widow drone with a camera fly over the battlefield and use its cameras to seek out threats below. Safe Pro's AI algorithms, running on an onboard computer, then identify threats from the visual data.
The Red Cat/Safe Pro contract is the Army's first order for an AI-powered threat analysis kit that equips drones to identify the kinds of threats described above, from above. So Red Cat and Safe Pro have demonstrated a new use case for military drones -- one that can save lives while also making money for defense contractors.
What it means for Red Cat
"Money" may be precisely the point at issue here, however, because neither Safe Pro nor Red Cat have yet confirmed how much revenue they will make off this initial contract, nor whether the work is profitable.
This lack of clarity might be the reason investors aren't rewarding Red Cat for the contract win today.
Should you buy stock in Red Cat right now?
Before you buy stock in Red Cat, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Red Cat wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $449,393!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,366,006!*
Now, it’s worth noting Stock Advisor’s total average return is 983% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of June 3, 2026.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The S&P 500 Index ($SPX) (SPY) on Thursday closed up +0.58%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.05%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.84%. June E-mini S&P futures (ESM26) rose +0.59%, and June E-mini Nasdaq futures (NQM26) rose +0.88%.
Stock indexes recovered from early losses on Thursday and settled higher, with the S&P 500 and Nasdaq 100 climbing to new all-time highs. Stocks rebounded after Axios reported that the US and Iran reached a deal to extend the ceasefire for sixty days and for negotiations to start on Iran's nuclear program, with President Trump still needing to approve the terms. The memorandum of understanding would state that shipping through the Strait of Hormuz would be "unrestricted," with Iran required to remove all mines from the strait within 30 days. Crude oil prices gave up a +3% advance on the news.
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Stocks initially moved lower on Thursday after fresh US attacks on Iran boosted crude oil prices and fueled doubt over whether an end to the war is imminent. The US struck Iranian military targets for the second time this week, and Kuwait said it responded to Iranian missile and drone threats.
Stocks also found support on Thursday amid Fed-friendly US economic news. The Apr core PCE price index, the Fed's preferred inflation gauge, rose as expected. Also, April capital goods new orders unexpectedly declined, weekly jobless claims rose more than expected, and Q1 GDP was revised downward. In addition, Apr new home sales fell more than expected. The 10-year T-note yield gave up an early advance and is down -2 bp to 4.46%.
US weekly initial unemployment claims rose by +5,000 to 215,000, showing a weaker labor market than expectations of 211,000.
US Apr personal spending rose +0.5% m/m, right on expectations. Apr personal income was unchanged m/m, weaker than expectations of +0.4% m/m.
The US Apr core PCE price index, the Fed's preferred inflation gauge, rose +3.3% y/y, right on expectations and the largest increase in 2.5 years.
US Apr capital goods new orders nondefense ex-aircraft and parts unexpectedly fell -1.1% m/m versus expectations of a +0.4% m/m increase and the biggest decline in a year.
US Q1 GDP was revised downward to +1.6% (q/q annualized), weaker than expectations of no change at +2.0%. Q1 personal consumption was revised lower to +1.4% from the previously reported +1.6%, and the Q1 core PCE price index was revised upward to a 3-year high of +4.4% from the previously reported +4.3%.
US Apr new home sales fell -6.2% m/m to 622,000, weaker than expectations of 660,000.
Hawkish Fed comments were negative for stocks and bonds. Fed Governor Lisa Cook said inflation is headed in the wrong direction and she would be prepared to raise interest rates if that persists. Also, Minneapolis Fed President Neel Kashkari said US consumer prices are still "much too high" and that bringing down inflation remains his top priority. In addition, St. Louis Fed President Alberto Musalem said inflation is meaningfully above target, expectations are rising, and the Fed should respond to higher real rates by hiking policy.
Crude oil prices gave up a +3% advance on Thursday and finished only slightly higher after Axios reported that the US and Iran have reached a preliminary agreement to extend the ceasefire for 60 days and begin negotiations on Iran’s nuclear program. Crude prices initially jumped on Thursday after US forces shot down four Iranian drones fired at a commercial ship and hit a launch site near the Strait of Hormuz. Also, the US Treasury added Iran's Persian Gulf Strait Authority to its Iran-related sanctions list to prevent Iran from profiting from vessels transiting the Strait of Hormuz by charging tolls. In addition, Israel stepped up attacks on Lebanon and said its ground forces would move further into the country, potentially complicating US-Iran talks on an interim peace deal.
The markets are discounting a 0% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.
The generally favorable Q1 earnings season is winding down. As of Thursday, 83% of the 482 S&P 500 companies that reported Q1 earnings have beaten estimates. Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence. Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.
Overseas stock markets settled mixed on Thursday. The Euro Stoxx 50 closed down -0.25%. China's Shanghai Composite recovered from a 5-week low and closed up +0.12%. Japan's Nikkei Stock Average closed down -0.47%.
Interest Rates
June 10-year T-notes (ZNM6) on Thursday closed up +4.5 ticks. The 10-year T-note yield fell -2.8 bp to 4.455%. Jun T-note prices recovered from early losses and climbed to a 2-week high, and the 10-year T-note yield fell to a 2-week low of 4.432%. T-notes moved higher Thursday on Fed-friendly economic news. Weekly jobless claims rose more than expected, Apr core capital goods orders unexpectedly declined, Q1 GDP was revised lower, and the Apr core PCE price index, the Fed's preferred inflation gauge, rose as expected. Also, Apr new home sales fell more than expected. T-notes maintained their gains on solid demand for the Treasury’s $44 billion auction of 7-year T-notes that had a bid-to-cover ratio of 2.52, better than the 10-auction average of 2.50.
T-notes initially moved lower on Thursday after WTI crude oil prices rose more than +3%, which raised inflation expectations. Also, hawkish comments from Fed Governor Lisa Cook, St. Louis Fed President Alberto Musalem, and Minneapolis Fed President Neel Kashkari undercut T-note prices, as they expressed concern about persistently high inflation.
European government bond yields moved lower on Thursday. The 10-year German Bund yield fell -2.5 bp to 2.962%. The 10-year UK gilt yield fell to a 5-week low of 4.791% and finished down -4.4 bp to 4.814%.
The Eurozone May economic sentiment indicator rose +0.3 to 93.5, stronger than expectations of no change at 93.0.
ECB Chief Economist Philip Lane said the impact of the Iran war will take longer to show in the labor market, and the "second round" of the energy shock on the Eurozone will persist for a while.
Swaps are discounting an 89% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.
US Stock Movers
Chipmakers and AI-infrastructure stocks rallied on Thursday to lead the broader market higher. ARM Holdings Plc (ARM) closed up more than +11%, and Advanced Micro Devices (AMD) and Qualcomm (QCOM) closed up more than +4%. Also, Sandisk (SNDK) and Marvell Technology (MRVL) closed up more than +3%, and Seagate Technology Holdings Plc (STX) and Broadcom (AVGO) closed up more than +1%.
Drone-related stocks surged on Thursday after the Wall Street Journal reported the Trump administration is exploring funding deals with a group of drone companies. Unusual Machines (UMAC) closed up more than +59%, and Red Cat (RCAT) closed up more than +34%. Also, AIRO Group Holdings (AIRO) closed up more than +21%, and AeroVironment (AVAV) and Kratos Defense & Security Solutions (KTOS) closed up more than +14%.
Snowflake (SNOW) closed up more than +36% after reporting Q1 revenue of $1.39 billion, better than the consensus of $1.33 billion and raising its 2027 product revenue forecast to $5.84 billion from a previous estimate of $5.66 billion, well above the consensus of $5.68 billion.
Dollar Tree (DLTR) closed up more than +17% to lead gainers in the S&P 500 after reporting Q1 adjusted EPS of $1.74, stronger than the consensus of $1.55, and raising its 2027 adjusted EPS estimate to $6.70 to $7.10 from a previous estimate of $6.50 to $6.90, above the consensus of $6.69.
Agilent (A) closed up more than +16% after raising its full-year revenue forecast to $7.39 billion-$7.49 billion from a previous estimate of $7.3 billion-$7.5 billion yuan, above the consensus of $7.39 billion.
Best Buy (BBY) closed up more than +15% after forecasting Q2 comparable sales up +1.00%, stronger than the consensus of down -0.32%.
Hormel Foods (HRL) closed up more than +12% after reporting Q2 adjusted operating margin of 9.9%, stronger than the consensus of 8.9%.
Heico (HEI) closed up more than +11% after reporting Q2 net sales of $1.38 billion, well above the consensus of $1.25 billion.
Cargurus Inc (CARG) closed up more than +4% after Barclays initiated coverage on the stock with a recommendation of overweight and a price target of $35.
Photronics (PLAB) closed down more than -36% after forecasting Q3 adjusted EPS of 39 cents to 45 cents, weaker than the consensus of 54 cents.
Symbotic (SYM) closed down more than -9% after Softbank Group is said to sell 5.6 million shares of its holdings of SYM in an unregistered block trade between $51 and $53.63 a share.
Tyson Foods (TSN) closed down more than -6% after announcing that CEO King will step down after five years.
Trade Desk (TTD) closed down more than 5% after Rothschild & Co Redburn reinstated coverage of the stock with a sell recommendation and a price target of $11.
HP Inc. (HPQ) closed down more than -2% after lowering the upper end of its full-year EPS estimate to $2.90-$3.10 from a previous view of $2.90-$3.20, citing rising memory and storage costs.
Earnings Reports(5/29/2026)
American Woodmark Corp (AMWD), Atlantic International Corp (ATLN), Buckle Inc/The (BKE), Critical Metals Corp (CRML), Genesco Inc (GCO), Liberty Live Holdings Inc (LLYVA), Navan Inc (NAVN), Pioneer Bancorp Inc/NY (PBFS), Richtech Robotics Inc (RR), Whitestone REIT (WSR).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Indicator	TTM Median
P/E	0.00 26.63
Price/Sales	19.72 1.47
P/B	5.44 2.65
P/FCF	0.00 19.57

Indicator	TTM Median
ROE	0.00 14.40
ROA	0.00 5.89
ROI	0.00 8.74
Net Worth	1.29 1.31
Quick Ratio	7.70 1.17
Current Ratio	10.99 1.58

Indicator	TTM Median
Net Profit Margin	0.00 7.36
Operating Margin	0.00 9.96
Gross Margin	7.41 32.60
Return on tangible equity	0.00 25.62

Indicator	TTM Median
EPS	-0.17 0.64
EPS Forecast	-0.14 0.62
Revenue	15.00M 181.00M
Gross Profit	2.00M —
EBITDA	-7.00M —

Red Cat Holdings, Inc.

Recent quarterly and TTM performance

Valuation

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Revenue