Ondas Just Dropped 38% in a Month: Is ONDS Stock a Falling Knife or Poised for a Comeback?

A sector-wide retreat from high-beta drone and defense-tech stocks has caught Ondas (NASDAQ:ONDS), even as the company’s revenue keeps growing. Ondas stock is down 38% over the past month to $4.58. That slide leaves the stock down 53% year to date (YTD), a sharp reversal for a company that has spent the year buying its way into counter-drone, loitering munition and defense robotics markets.

The question for shareholders is whether the decline reflects broken fundamentals or a volatile stock getting swept up with its group. Ondas stock carries a beta of 3.082, so it tends to swing far harder than the broad market in both directions.

How a Drone Stock Sell-Off Dragged Ondas Lower

High-beta drone and defense-tech stocks have sold off hard in recent weeks, and a risk-off move in speculative growth stocks after the midterm elections added pressure this week. Ondas has moved with that tide, and its closest peers tell the same story.

AeroVironment (NASDAQ:AVAV | AVAV Price Prediction) stock is down 26% over the past month to $102.55, a milder decline than Ondas has posted. Red Cat Holdings (NASDAQ:RCAT) stock is down 45% over the past month to $3.46, a steeper drop than Ondas. Taken together, the two peers place Ondas in the middle of a sector-wide sell-off, with one rival falling less and one falling more.

How Ondas Differs From AeroVironment and Red Cat

Ondas has built its business through acquisitions, putting together a system-of-systems portfolio that covers counter-drone defense, loitering munitions, stratospheric surveillance and unmanned ground vehicles. SkyWeaver, an edge-AI platform Ondas is developing with Palantir Technologies (NASDAQ:PLTR), is designed to tie those systems into customers’ command-and-control networks.

By contrast, AeroVironment is an established defense contractor. Its lineup runs from Puma reconnaissance drones and Switchblade loitering munitions to directed-energy and cyber systems, sold largely to the U.S. Department of Defense. Red Cat is a smaller drone maker built around its Black Widow small unmanned aircraft, with a newer push into uncrewed surface vessels, while integration matters more for Ondas than for either peer since its growth depends on integrating many recently acquired businesses together.

Bull Case for Ondas: Cash, Backlog and a Steep Revenue Ramp

Ondas, then named Ondas Holdings, announced on January 12 that it had closed a $1 billion stock and warrant offering. The company said the shares and warrants priced above market. At the end of June, Ondas held $1.4 billion. The holdings were in cash, cash equivalents, restricted cash and short-term investments, which could give it room to fund its drone and defense expansion without near-term cash pressure. Management noted the company kept significant financial flexibility even after deploying $325 million in Q3 2026 to close the DZYNE and Cyberhawk acquisitions.

The bulls also point to the August 13 report, when Ondas posted Q2 2026 revenue of $83.8 million, up 67% from the prior quarter and more than 13x the year-earlier level. Along with those results came a higher full-year 2026 revenue target of $525 million to $550 million and a pro forma backlog of $757 million. Demand for drones and counter-drone systems from militaries and governments offers a long-term boost for that portfolio. Sell-side ratings lean bullish as well, with three Strong Buy ratings, seven Buy ratings and no Hold or Sell ratings.

Bear Case for Ondas: Losses, Dilution and Sector Momentum

Profitability is still a long way off for Ondas. The company’s Q2 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss was $51 million, and its earnings per share (EPS) of -$0.14 missed expectations of -$0.09. Company-wide adjusted EBITDA profitability isn’t expected until Q4 2027, according to management.

Dilution is the second worry. Ondas’s January raise issued a large block of new shares and warrants, and its share count climbed from 80,178,416 at the end of 2024 to 503,593,000 at the end of June.

Sector momentum cuts against Ondas too, since the stock trades with a speculative group that can keep falling, and uncertainty in Washington over defense budgets after the midterms adds another layer of risk. Management has highlighted supply-chain challenges and possible second-half gross margin pressure from product mix.

What Comes Next for Ondas After Its Steep Monthly Slide

The next test for Ondas is its upcoming Q3 results. The results should show the second-half delivery ramp management has promised, including volume shipments against more than $240 million of orders under the U.S. Army’s $982 million lethal unmanned strike program. Beyond earnings, watch for new contract announcements and signs that cash burn is slowing as revenue scales.

To the bulls, Ondas is a well-funded company with a fast-growing backlog caught in a sector-wide sell-off. The skeptics might counter that the company is still burning cash, adding shares and trading at the mercy of a momentum-driven group. A conservative investment approach could make sense until the issue of Ondas’s delivery ramp resolves.

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