Ondas Retreats 5% Despite Record Revenue and Raised Outlook; Red Cat Drops 4%, AeroVironment Holds Steady
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Drone and defense-tech stocks are giving back ground as investors look past the headline numbers in third-quarter results from Ondas Holdings (NASDAQ:ONDS). Ondas stock trades at $5.42 in morning trading, down 5%. The company posted record revenue and raised its outlook, yet the market is zeroing in on thinner margins and a wider-than-expected loss.
Growth and technology stocks are under pressure. This comes after Jensen Huang resigned as CEO of NVIDIA (NASDAQ:NVDA | NVDA Price Prediction), according to CNBC and The New York Times. Heading into the report, Ondas and its drone peers rallied sharply on November 6, which leaves room for profit taking now that the numbers are out.
Ondas Posts Record Revenue and Lifts Its 2027 Ambitions
Ondas reported Q3 2026 revenue of $167.49 million before the open on November 12, exceeding the $148.04 million consensus estimate. That total cleared Ondas’s own prior guidance range of $140 million to $155 million and marked growth of 1,558.6% year over year. The company’s bookings reached $214 million in the quarter, and its backlog stood at $835 million at quarter’s end.
On the outlook, Ondas raised its full-year 2026 revenue target to at least $550 million from a prior range of $525 million to $550 million. For Q4 2026, Ondas expects revenue above $250 million, and the company set an initial 2027 target of at least $1.1 billion, excluding additional acquisitions. Management also pulled forward its company-wide adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) profitability target to Q3 2027 from Q4 2027. CEO Eric Brock stated, “We expect a strong finish to 2026, with momentum accelerating in the fourth quarter as volume deliveries ramp across existing programs.”
Why Ondas Stock Is Slipping After a Record Quarter
Ondas’s loss per share under generally accepted accounting principles (GAAP) came in at $0.10, missing the consensus estimate of a $0.09 loss. That loss already includes $125.1 million in non-cash warrant gains. Operating losses at Ondas remain large at $189.5 million, while stock-based compensation of $57.8 million keeps dilution on investors’ radar.
Ondas’s gross margin contracted sharply to 21.8%, pressured by intangible amortization, an inventory step-up and ramp inefficiencies in precision strike. Looking ahead, the company expects similar gross margin levels in the current quarter because of mix before a recovery to historical levels. Some traders had viewed elevated short interest as fuel for a squeeze, and that hoped-for squeeze hasn’t materialized so far.
Red Cat Falls Harder While AeroVironment Holds Steady
Red Cat Holdings (NASDAQ:RCAT) stock is at $4.13, down 4%. Moving with the broader drone group, Red Cat is sliding further than Ondas as the post-earnings selling spreads to smaller names.
Meanwhile, AeroVironment (NASDAQ:AVAV) stock is at $120.76, down 3%. AeroVironment’s gain sets it apart from the selling in Ondas and Red Cat. At the same time, Kratos Defense & Security Solutions (NASDAQ:KTOS) rounds out the group of defense-technology names in focus; KTOS stock trades at $35.54, down 3%.
How Ondas’s Acquisition Strategy Sets It Apart From Drone Peers
Ondas has assembled its platform largely through acquisitions. This gives it reach across counter-unmanned aircraft systems (counter-UAS), precision strike, long-endurance surveillance aircraft, stratospheric balloons and robotic ground vehicles. That range fuels rapid top-line growth at Ondas, though folding so many businesses together at once weighs on margins and raises integration risk.
Red Cat concentrates on small tactical drones led by the Black Widow, and its Blue Ops unit builds uncrewed surface vessels for maritime missions, while AeroVironment is the most established of the group, pairing Switchblade loitering munitions and Puma aircraft with space, directed-energy and cyber businesses. Kratos brings a different mix, with hypersonics, jet engines for drones and missiles, and the Valkyrie unmanned aircraft.
What Ondas Has to Prove on Margins Heading Into 2027
The next test for Ondas is whether its gross margin recovers after the current quarter, as management expects. For their part, bulls highlight Ondas’s record revenue, a growing backlog and an earlier profitability target. Bears, meanwhile, see heavy GAAP losses, warrant accounting changes and ongoing dilution as reasons for caution.
Ondas’s next earnings report should show whether volume deliveries on existing programs translate into better margins. Investors researching Ondas stock may want to track its margin trend closely until the question of Ondas’s margin recovery resolves.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk. His work has appeared in 24/7 Wall St., The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, MarketScreener, TalkMarkets, Finmasters, and others. With a master’s degree in education, David has taught at the elementary, high school, and college levels. That teaching background shapes his writing style: clear, educational, and practical. David has also built a loyal social-media audience by providing trustworthy financial content on YouTube, X/Twitter, and StockTwits.
