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Analyst Says Drone Co. Poised to Benefit From Growing Demand for Small UAVs
Source: Glenn Mattison (6/14/24)
According to a Ladenburg Thalmann research note, Red Cat Holdings Inc. (RCAT:NASDAQ) is poised to benefit from growing UAS demand. Read on to see the rating and target price given to the company.
Ladenburg Thalmann analyst Glenn Mattson initiated coverage on
streetwise book logo Streetwise Company Fact Sheet
2024/6/17 16:21:08
"Red Cat Holdings Inc. (RCAT) has attained key government approvals, paving the way for participation in large contracts. The company's lead unmanned aerial vehicle (UAV) the Teal, is now in the second and third generation of development," Mattson noted. "The product is portable by rucksack and can give soldiers in the field situational awareness in the form of intelligence, surveillance, and reconnaissance (ISR) as well as provide offensive capabilities in the form of loitering munitions delivery systems."
The analyst highlighted that the Teal 2, Red Cat's lead product, has been designated as Blue UAS certified by the Defense Information Unit (DIU), a subsidiary of the U.S. Department of Defense (DoD). This certification allows U.S. armed forces to rapidly prototype and deploy UAS technology.
Mattson also discussed the impact of the American Safety Drone Act (ASDA), which was passed as part of the December 2023 National Defense Authorization Act (NDAA). The ASDA requires that no federal dollars can be used to purchase drone technology from certain adversarial nations, and the U.S. government has stated that one secondary goal of the program is to accelerate the development of the U.S. drone industrial base.
"Along with these government mandates, the DoD has significant large programs of record such as the short-range reconnaissance (SSR) and the Replicator program. The SSR is in the final selection stages, and RCAT is one of two companies down-selected for a likely multi-hundred million program," Mattson stated.
The analyst's financial model suggests that Red Cat's top-line growth is more dramatic than it appears, given the recent divestitures of the consumer divisions.
"Essentially the Teal 2 has gotten to a nearly US$30 million run rate in revenue up from zero over just the past 12 months. We model more than 50% top-line growth in F:25 (April) given swelling demand across the NATO and NATO friendly countries," Mattson explained.
Ladenburg Thalmann's valuation of Red Cat is based on a multiple of the company's projected revenue run rate. "We use 5x our 4QF:25 exit run rate revenue, to achieve our price target of US$4 per share and initiate coverage of RCAT with a Buy rating," Mattson stated.
RCAT- this kitty starting to puuuuuuuuuuuuuuuuuurrrrrrrrrrrrr
RCAT...............................https://stockcharts.com/h-sc/ui?s=RCAT&p=W&b=5&g=0&id=p86431144783
errr, make that $ 4 pps
--Ladenburg Thalmann Initiates Coverage on Red Cat Holdings With Buy Rating, $4 Price Target
MT NEWSWIRES - 7:17 AM ET 6/14/2024
INVESTMENT NEWS
there's just too many catalysts to keep this under $ 2 pps for much longer
Opinion below:
Most drone companies are a solid investment, at least in comparison to RCAT. But this forum is about RCAT. Just looking at the face of it: bought 5 or 6 different companies, and it's down to 1 now. Owners of the companies that were spun off to UMAC are retired now (as was the plan), or at least no longer involved in the company. UMAC was spun off as the consumer segment, and all they are talking about is going after defense contracts now. So, the scam continues at UMAC just on a smaller scale.
I'm sure there will be more mergers on the horizon to justify further dilution. I hope Teal owners are smart enough to sell into any strength to make sure they end up with something at the end of all of this. Because eventually RCAT will not have enough firepower to manipulate the stock price to maintain NASDAQ listing to offload shares into some ETF that just buys it blindly for "diversification" - or the dumb fools here :)
You forget the purpose of this stock - it's an exit vehicle for failed drone company owners. It will never go up, since owners will start selling into any strength. the only thing you can count on is that they will keep manipulating the stock to surge over $1 to prevent a de-listing every now and so often.
The higher it goes over $1, the more you can short it. The more it goes below $1, the more you can close the positions and/or go long.
(not financial advice, obviously)
Source: Mike Mareen / Shutterstock.com
Red Cat Holdings (NASDAQ:RCAT) is another drone company that specializes in recon. It reported outstanding results for its Q3 FY2024 that once more surpassed its forecast guidance. It posted 250.6% YOY revenue growth for Q3. This put sales at $5.85 million in the recently reported quarter. A big star of their show is the Teal 2 drone, which is gaining significant popularity with the Department of Defense and many NATO countries.
What excites me the most is Red Cat’s strategic software partnerships that could dramatically boost their gross profit margins. Red Cat is positioning itself to achieve profit margins of 65% or higher. If customers opt to add multiple complementary software options, margins could even approach 85%.
While organic expansion remains the foundation of its success, Red Cat is also pursuing lucrative prospects, such as the SRR program of record. However, even without securing these larger contracts, I believe they have a clear path to reaching operational breakeven as they continue gaining market share in the small unmanned defense sector. Full-year revenue growth is also expected in the high 80s, and the same is expected next year.
I see juicy upside, and so do most analysts who cover this stock.
3 Drone Stocks to Buy and Hold Through 2030 for 10X Gains
These drone stocks could soar to new heights
4h ago · By Omor Ibne Ehsan
These drone stocks have solid potential for substantial gains as the demand for unmanned aerial vehicles surges across military and commercial applications.
DroneShield (DRSHF): A leader in counter-drone technology witnessing explosive revenue growth and profitability.
Unusual Machines (UMAC): This drone manufacturer is expanding into the defense sector.
Red Cat Holdings (RCAT): A reconnaissance drone specialist experiencing rapid revenue growth.
Forming an industry group demonstrates commitment to what they are doing.
BUY these dips, it won't stay down for long.
$ RCAT
BUY,BUY,BUY!
“Red Cat Announces Agreement with Sentien Robotics UAS Hive for Land, Air and Sea Drone Swarming Operations
GLTA
$ 1 ????? we headed to $ 2 dollars now. hehehehehe
$ 2 dollars UP next !! RCAT $$$
8 more days above $ 1 , and we're nasdaq $$$$$$$
I wonder how much time we have to get it over $1 before NASDAQ delists?
GLTA
I've been saying this for years, but the bag holders in here just won't comprehend. Fine for me, I've shorted from the very start and I've exited my position several times and re-entered after the press releases that lured in even bigger idiots. Part of why posting here is so much fun.
To be honest, I still hope that this kind of theft is going to be brought to justice, especially since it's so brazen and tax payer funds are involved now. Something should be done eventually - one can only hope.
Excellent appraisal of a nano cap company that appears to be in business simply to enrich four or five guys, not all that unusual when it comes to third tier Nasdaq companies
There are literally hundreds of them
Patrick Boyle calls them zombie companies, and he’s not the only observer of corporations who has used zombie to describe money losing companies continually borrow money al less than favorable terms to remain operable
The bull market, which began in November 2022, hasn’t yet trickled down to the nano cap micro cap and very small cap sectors the way it has for mega cap giant cap large cap and mid cap sectors
A case in point: Curtis-Wright (CW) is a mature small to mid cap company
i didn’t purchase some shares in 2022, but I did buy in 2023 as the stock was making new 52 week highs
So let’s do a three year comparison to demonstrate how, in my opinion, the smart money is deploying its capital
After reading this 10Q I'm wondering at which point the participants will be arrested for theft. Consumer segment has 1.1M of revenue and 1.7M cost of goods sold? 100k of marketing a month? So they were basically stealing about 0.5M a month from operations, because a trading business doesn't buy higher than they sell goods for, so they are overcharging themselves and sifting off cash. And a YouTube channel of their scale doesn't cost 100k a month to run.
And that's just the consumer business ("discontinued operations"). The ongoing operations are trying to make you believe that a $15'000 drone costs $12'000 to make (comparable systems are sold at BestBuy for less than $1000).
Despite all of that, they're also paying out stock based compensations to the tune of $3M a year. It's just laughable. Can't wait for the next pump to short this piece of trash on the way down again. $0.8 is still a $0.9 premium
Amazon re-invested in the business, RCAT into executive compensation. Amazon's marginal cost structure improved with growing revenue, RCAT's marginal cost is getting worse. It doesn't take a genius to figure out the reasons behind it, or the future trajectory. RCAT got a life-line with the current environment, but that will run out and then the stock will completely unwind.
The people inside the company know this, which is why they're selling everything they can and pulling as much capital out of the company as possible, while pumping the stock with PRs such as the one yesterday.
You don't actually have to over-analyze this. Just look at the fundamentals: A company that was formed through a reverse-merger bought several drone companies while bringing no value to the table (they used your money for it after all). All acquisitions were advertised as strategic and visionary to some combined benefit and all but one have since either unwound, closed down or passed on to another company. Meanwhile the owners exited with plenty of cash which the stock paid for (and continues to pay for) by decreasing in value.
And you're here telling me some story about increasing revenues and making comparisons to Amazon ... just like the owners, with the exception that you're not in on the gravy train but funding it :)
Yes but Nick. Give me revenue increase everything else will follow. Remember the early days of Amazon. Takes time mate
GLTU
they still aren't making money. notice how they only mentioned revenue?
profit is still basically zero, so no matter how much revenue increases, they're still treading water while paying themselves millions and diluting shares.
News like that and we’re not $1?????
WTF!
GLTA
I've been telling you something is going on for years. They are slowly divesting of their company ownership on your dime. It's a slow-motion rug-pull :)
... based on the news of acquisition of a company that they're now desperately trying to get rid of.
Oh Nick! We’ve been friends longer than those figures, silly. Remember when RCAT went from .86 to 7.50? Those were the days! You haven’t forgotten? I haven’t. Anyways, I wish you a Merry Christmas! I hope you’re not just a bot :)
You can’t tell me something is not going on here!
GLTA
You know you've been saying that at $2, $1.50, $1 and now $0.5. Ironically, the owners are cashing out rapidly to the tune of several million dollars each quarter. They don't seem to agree with you :)
Soon, very soon. Don’t worry Nick :) A silent bag holder, but I’m still here :) Great time to buy!
'tis but a scratch, eh? :)
NO, but suddenly the rocket is stationed on the pad
GLTA
Are we there yet? :)
It was obvious from the start, but nobody believed it. The silence by bullish bagholders is deafening :)
.50 less related commissions and expenses!?
They should offer free ass wipe for that arse!
Good grief. Can you spell d-e-s-p-e-r-a-t-e?
I took it up the brown eye here
Wow, almost a 50% discount with the offering @ .50. Who's brilliant idea was it to shoot themselves in the arse!??
Saw the dip and was thinkin this might be good for a dead cat bounce...
nope. Not for me anyway.
https://www.globenewswire.com/news-release/2023/12/07/2792183/0/en/Red-Cat-Holdings-Inc-Announces-Pricing-of-Public-Offering.html
Can't say this is surprising. Is it too early for a victory lap? In magic, we call this one the prestige.
don't worry, there will be more press releases about nothing. they need to get it over $1 or they'll be delisted soon.
With the grant and excellent report that was it!?
Pfffttt! Good grief. What will it take
GLTA
YES!
Red Cat Subsidiary Teal Drones Selected for $750K Manufacturing Modernization Grant from State of Utah
GLTA
We should get a jump today after thst quarterly! $$$
GLTA
Do you guys think the impeding NASDAQ deficiency notice is the reason for the recent rally? Or is the price manipulation not yet obvious to everyone.
The owners have the least to lose. That's what "going public" means - you sell the company at a multiple. It's also called "taking skin out of the game" or "taking money off the table".
Going public makes sense to the investors when your capital requirements exceed your cashflow, due to rapid growth - they get rewarded for providing the risk capital. The owners have enough money to fund growth themselves, but they're not. I wonder why that is?
On top of that, you're not seeing any growth, are you? So, where is all that money going? It's going into bonuses & salaries. Seems that the owners and I are in agreement: the companies have run their course, and the best way for them to make money is to leverage the hot news of the day to look for more greater fools to pay themselves insane bonus packages by overpaying for product, overpaying salaries, overpaying for other daily operations and - last but not least - selling shares. It's how government contractors and corrupt government officials typically make money, just in this case it's the investor that's getting fleeced instead of taxpayers.
Anyway, all of this is probably going over your head. In the meantime, enjoy watching the ticker go down, down, down.
We agree! Yes! Not so excited about agreeing with “The Joker” but, I have “The Penguin” as a Senator so “What the heck”! As for the owners…I like to let “owners” be “owners” lol! They have the most to lose. You know, if you run down a hill, and stop in the middle, anything bigger than you has to keep going, lol! Always better to stay small. Have a great night!
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ORLANDO, Fla., Oct. 5, 2020 /PRNewswire/ -- Red Cat Holdings, Inc. (RCAT:OTC) today announced the signing of a definitive agreement to acquire Fat Shark Holdings, the market leader in FPV headsets. The transaction, subject to customary conditions, is expected to close on or before November 1, 2020.
Founded in 2007, Fat Shark is the leading provider of headsets and goggles for professional racers and drone pilots with an estimated market share of 85%. Fat Shark is presently generating approximately $7 million (unaudited) in annual revenues which will significantly increase the revenue base of the combined companies. This transaction follows the Company's acquisition in January 2020 of Rotor Riot, a leading provider of FPV and drone racing hardware.
"Our expected acquisition of Fat Shark strengthens our position by providing direct access to premier FPV technology favored by professional racers and drone enthusiasts alike. The combination not only provides a fully-integrated supply chain but adds design and development capabilities as well as international manufacturing and distribution. Greg French and Allan Evans bring world-renowned skills and decades of experience to our team. Fat Shark's existing digital platform and innovation also provides a valuable road map to fuel our future growth and our expansion into the enterprise drone market" stated Jeff Thompson, CEO of Red Cat. "Importantly, it positions us to continue to develop and introduce innovative products and solutions as commercial applications of drone technology expand in the coming years."
"Red Cat has emerged as a leader in the FPV sector of the drone industry and we are excited to join their growing team of business professionals" noted Greg French, founder and CTO of Fat Shark. Added Allan Evans, CEO of Fat Shark "We are excited to partner and integrate feedback from the top pilots at Rotor Riot as we develop and expand our digital video systems. Rotor Riot is especially well situated to help us build better FPV products as well as expand into enterprise training and field solutions."
"With the addition of Fat Shark to Red Cat's portfolio we have paired a quality hardware base with Rotor Riot, a robust educational/entertainment brand" stated Chad Kapper CEO of Rotor Riot. "Fat Shark's new line of digital headsets with their "out of the box" functionality meshes perfectly with our popular "Ready To Fly" (RTF) packages. We are excited to promote their functionality on our YouTube channel and our digital store at www.rotorriot.com as well as leverage the strong brand recognition Rotor Riot enjoys. We believe the addition also allows us to continue expansion into the emerging gaming and augmented reality (AR) markets with future innovative products."
About Red Cat Holdings, Inc.
Red Cat is developing a fully-integrated drone supply chain with secure blockchain-based distributed storage, analytics and SaaS solutions for adoption in the drone industry. Red Cat supports education, training and sales of drone products through its Rotor Riot platform and is developing the means to accurately track, report and review flight data that will be useful for insurance and regulatory requirements. Red Cat's maintains a commitment to deliver unrivaled innovation to make drones aviators and products accountable and the sky a safer place. For additional information, visit www.redcatholdings.com and www.rotorriot.com.
Safe Harbor
The information provided in this press release may include forward-looking statements relating to future events or the future financial performance of the Company. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Words such as "anticipates," "plans," "expects," "intends," "will," "potential," "hope" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon current expectations of the Company and involve assumptions that may never materialize or may prove to be incorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties. Detailed information regarding factors that may cause actual results to differ materially from the results expressed or implied by statements in this press release relating to the Company may be found in the Company's periodic filings with the Securities and Exchange Commission, including the factors described in the sections entitled "Risk Factors", copies of which may be obtained from the SEC's website at www.sec.gov. The parties do not undertake any obligation to update forward-looking statements contained in this press release.
Item 7.01 | Regulation FD Disclosure |
On June 4, 2019, we released the press release furnished herewith as Exhibit 99.2.
SECTION 8 – OTHER EVENTS
Item 8.01 | Other Events |
On June 4, 2019, we executed a Letter of Intent with Rotor Riot, LLC (the “LOI”), a copy of which is furnished herewith as Exhibit 99.1. The LOI, which is non-binding, sets forth the terms for our contemplated acquisition of Rotor Riot, a drone technology and media company. Any acquisition of Rotor Riot will be subject to the completion of due diligence, the negotiation of a definitive agreement, and other conditions.
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