Unusual Machines Shares Jump After CEO Warns of Short Seller Attack

Mysterious sightings of flying objects over New Jersey and across the eastern U.S. have captivated the nation. While some Americans have raised concerns about security and safety, alien enthusiasts speculate that our extraterrestrial friends may be visiting us.

Whether the objects are friends or foes, as savvy investors, any situation that warrants attention is an investable opportunity, And in this one, drone stocks have started buzzing.

This is for good reason. Drones can be effective pieces of monitoring equipment for the surveillance of these mysterious objects. Moreover, aside from security purposes, drones have use cases in a variety of industries. In agriculture and construction, drones monitor operations, ensure compliance, and inspect assets for damage or wear. Their deployment in disaster management helps assess damage, locate survivors, and guide relief efforts.

Drones also play a pivotal role in crowd monitoring during large-scale events, helping manage public safety by identifying disturbances or bottlenecks. Law enforcement agencies deploy drones for crime scene investigations, suspect tracking, and search-and-rescue missions.

Thus, unsurprisingly, the market size for drones is set to soar with it expected to touch $54.81 billion by 2030. These four stocks are potential ways to capture the upside of this space.

Drone Stock #1: AeroVironment

Founded in 1971, AeroVironment, Inc. is a leading American technology company specializing in unmanned aircraft systems (UAS) and tactical missile systems. The company's primary offerings include UAS, missile systems, uncrewed ground vehicle and a helicopter designed to explore Mars. Its market capitalization currently stands at $4.4 billion.

AVAV stock is up 25% on a year-to-date basis.

Overall, analysts have deemed the stock a “Strong Buy” with a mean target price of $225.20. This denotes upside potential of about 43% from current levels. Out of 6 analysts covering the stock, 4 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating and 1 has a “Hold” rating.

Drone Stock #2: Kratos Defense

Founded in 1994, Kratos Defense is a prominent American defense contractor specializing in unmanned systems, satellite communications, and cybersecurity solutions. Its market cap is currently at $3.85 billion.

KTOS stock has gained 25% on a YTD basis.

Meanwhile, analysts remain cautiously optimistic about the stock, giving it a rating of “Moderate Buy” with a mean target price of $27.27 which denotes an upside potential of about 6% from current levels. Out of 12 analysts covering the stock, 6 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating and 5 have a “Hold” rating.

Drone Stock #3: Red Cat Holdings

Founded in 1984 as Oravest International, Red Cat Holdings is a drone technology company specializing in the integration of robotic hardware and software for military, government, and commercial applications. Its focus lies on UAS, military and government contracts and commercial operations including surveillance and data collection.

Valued at a market cap of $729.7 million, RCAT has been a multi-bagger this year, gaining 878% on a YTD basis. A recent partnership with defense tech company Palantir further propelled the stock to higher levels.

With just one analyst covering it, Red Cat has been deemed a “Strong Buy” with a mean target price of $15 which denotes an upside potential of about 68% from current levels.

Drone Stock #4: Unusual Machines

Unusual Machines was founded fairly recently in 2019. It is a technology company specializing in drone solutions, particularly first-person view (FPV) systems for drone pilots. The company designs, manufactures, and sells ultra-low latency video goggles for drone pilots. It also operates a drone-focused e-commerce marketplace, serving drone pilots, hobbyists, and recreational users. Its market cap is currently at $96 million.

Meanwhile, UMAC stock has rallied 250% on a YTD basis. The strong showing in the stock can also be attributed to Donald Trump Jr., the son of President-elect Donald Trump, joining its advisory board.

Only one analyst covers the stock and has deemed it a “Strong Buy” with a mean target price of $4 that has already been surpassed.

On the date of publication, Pathikrit Bose 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.

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Unusual Machines, Inc. , a United States-based drone and drone components manufacturer, has captured significant investors and speculation attention recently, with its stock surging after the announcement that Donald Trump Jr. joined its advisory board. The stock's rapid rise, driven by a significant increase in volume and online buzz, has led many to speculate whether UMAC could potentially turn into and be the next meme-type stock to make outsized moves.

What Is Unusual Machines? A Pioneer in Domestic Drone Components

Unusual Machines specializes in building and selling drone components, focusing on reducing reliance on foreign supply chains. Earlier this year, the company acquired FPV market leader Fat Shark and Rotor Riot, a major e-commerce platform for drone enthusiasts. These acquisitions position Unusual Machines to serve growing industries such as public safety, defense, and enterprise inspection while leveraging a shift toward American-made drone components due to geopolitical tensions and legislative changes.

The company sees an opportunity to grow rapidly as industries increasingly prioritize domestic manufacturing. According to its CEO, Allan Evans, Unusual Machines aims to lead this shift by innovating products like the recently launched Brave F7 FPV Flight Controller, which reduces dependence on foreign components.

Trump Jr. Joins the Advisory Board

The appointment of Donald Trump Jr. to UMAC’s advisory board is a strategic move as the company seeks to expand its footprint in the U.S. drone market. Trump Jr. expressed enthusiasm for the company’s mission to bring drone manufacturing jobs back to America, aligning with the broader push for onshoring production. His involvement and reputation as a business leader and investor have helped thrust UMAC into the spotlight.

CEO Allan Evans highlighted Trump Jr.’s expertise and influence, emphasizing his potential to guide the company’s growth during this pivotal time. The stock's dramatic rise following this announcement underscores the market’s perception of the significance of his appointment.

Can UMAC Sustain Its Momentum?

While the stock’s meteoric rise has been fueled by investor enthusiasm and online buzz, UMAC’s fundamentals provide a mixed picture. The company reported Q3 2024 sales of $1.53 million, a 9% sequential increase, with gross margins at 26%. It aims to achieve $5 million in sales this year, reflecting steady growth. However, its valuation is stretched, trading at 35 times sales with a $125 million market and a limited float of under 5 million shares.

The stock’s recent surge of nearly 700% in the past month highlights its highly speculative nature, with rapid price swings likely due to its low float and heightened interest and trading volume. Moreover, the “Trump factor” could continue to drive momentum, as association with high-profile names has historically spurred similar stocks into volatile trading patterns.

Balancing UMAC’s Speculative Nature with Promising Fundamentals

UMAC’s speculative nature is clear, with significant risks tied to its micro-float, elevated short-term valuation, and possible reliance on retail investor interest. Online mentions and bullish sentiment have added fuel to its rally, but the stock’s long-term potential hinges on its ability to scale operations and capture a meaningful share of the growing U.S. drone market.

While limited analyst coverage exists, a single Buy rating from ThinkEquity signals some institutional confidence. Potential investors should consider the stock carefully, weighing its dramatic recent gains alongside its speculative nature and promising yet still developing fundamentals.