Ondas Holdings (ONDS) has seen its share price decline significantly over the past few months, falling from a high of $15.30 last year to around $7.60. This represents a drop of more than 50% from its all-time high, a trend that mirrors the broader drone sector's recent struggles.
The company's stock has been under pressure as other drone-related equities have also tumbled. AeroVironment has plunged over 65% from its peak, while Kratos Defense & Security Solutions (KTOS) is down 64%. Other players like Red Cat Holdings, Unusual Machines, and Draganfly have also experienced sharp declines, despite growing demand for drone technology.
Revenue growth continues
Ondas reported a 13% increase in second-quarter revenue to $83 million, with a backlog of $757 million. Management projects full-year revenue between $525 million and $550 million, and the company's deal pipeline for the next two years is estimated at $11 billion. This growth is supported by increased investments in drones by the U.S. and other governments.
The company's "Core + Growth" strategy has helped secure $175 million in new orders. Additionally, acquisitions of DZYNE Technologies and Cyberhawk have expanded its technology and customer solutions, positioning the company for continued expansion.
Analyst optimism vs. market skepticism
Despite the positive revenue trajectory, investor confidence remains low. Short interest has climbed to 40% of the float, reflecting concerns about elevated losses, intense competition, and potential capital raises. The company's share count has surged to 529 million from just 40 million in 2022, largely due to M&A activity.
Analysts, however, remain bullish. Oppenheimer's Timothy Horan raised his price target from $16 to $18, while Needham's Austin Bohlig set a target of $19. Northland Securities' Michael Latimore also increased his target to $18. Other bullish calls come from HC Wainwright, Stifel, and Loop Capital.
Technical outlook
From a technical perspective, ONDS stock has broken below key support levels, including the 50-day exponential moving average and the 50% Fibonacci retracement. It has also slipped under the $9.97 resistance level, which was its August 12 high. These signals suggest further downside, with the next support level at $6.22. A break below that could lead to additional losses.
While the company's growth story is compelling, the market's skepticism is reflected in the high short interest and declining share price. Investors will be watching to see if Ondas can translate its backlog and pipeline into profitability.
This article is for informational purposes only and does not constitute financial advice.
