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Drone Co. Closes Deal Worth US$1.8 Million

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Red Cat Drones has closed a deal through its subsidiary, Teal Drones, that is worth US$1.8 million. Read on to see why investors have called this company a "Screaming Buy."

According to a press release from Red Cat Holdings, Inc., (RCAT:NASDAQ) the company has finalized a deal for US$1.8 million with the United States Customs and Border Protection (CBP) through its subsidiary company, Teal Drones.

According to the company, the agreement stipulates that the company's subsidiary, Teal Drones will provide 106 drones, along with spare parts and training to facilitate the operation of those drones.

Teal Drones is not the only company operating within this deal with CBP, as the press release reports that it is part of a Blanket Purchase Agreement (BPA) that includes five drone companies besides Red Cat. This BPA is worth an estimated US$90 million and has included past purchases from Teal Drones worth US$1 million.

Increased Military Aid in Drones for Ukraine

According to U.S. News, the U.S. has indicated that it intends to provide military aid valued at US$1.3 billion for Ukraine, which includes drones and counter-drone technology.

Chris Temple of The National Investor rated the company as a "Screaming Buy" for investors last year.

To date, U.S. News reports that the U.S. has provided roughly US$10.8 billion in military aid to Ukraine to assist in its conflict with Russia, a conflict that has seen heavy use of armed drones.

The Associated Press noted that the U.S. has okayed the delivery of major military equipment to Ukraine in the form of F-16 fighter jets, adding further air power on the side of Kyiv.

A Screaming Buy

Technical Analyst Clive Maund reviewed the company most recently on July 27 of this year. Maund commented that "this is regarded as a very good point to add positions," based on the company's stock performance.

A ThinkEquity research report from earlier this year reviewed the company positively.

The report noted, "ThinkEquity expects Red Cat's revenue and operating income to increase. The investment bank estimates revenue will reach US$11.9 million in FY23 and then more than triple to US$37 million in FY24. Also, it projects an increase in operating income during that same period to US$2 million from US$19 million." The report identified the company's infrastructure and contracts with the U.S. government as causes of the company's increased revenue potential.

Chris Temple of The National Investor rated the company as a "Screaming Buy" for investors last year.

Temple commented, "The value proposition here is mind-blowing when you look at Red Cat's potential business in the months, to mention years, ahead, I.M.O.; which is why I am starting it as a buy and adding it to my list of growth-oriented companies."

streetwise book logoStreetwise Ownership Overview*

Red Cat Holdings Inc. (RCAT:NASDAQ)

*Share Structure as of 9/27/2023

Ownership and Share Structure

Reuters provided a breakdown of the company's ownership and share structure, where management and insiders own 36.09% of the company.

According to Reuters, CEO Jeffery M. Thompson owned 22.09% of the company with 12.29 million shares, insider Gregory Ralph French owns 8.65% of the company with 4.82 million shares, COO Allan Thomas Evans owns 2.40% of the company with 1.34 million shares, director Nicholas Reyland Liuzza Jr. owns 1.75% of the company with 0.98 million shares, CFO Joseph P. Hernon owns 0.65% with 0.36 million shares, and CEO of Teal Drones George Michael Matus owns 0.55% with 0.31 million shares.

Institutions own 5.23% of the company, as The Vanguard Group, Inc., owns 2.29% with 1.28 million shares, Pelion Venture Partners owns 1.61% with 0.90 million shares, Essex Investment Management Company, LLC, owns 0.71% of the company with 0.39 million shares, and Geode Capital Management, LLC, owns 0.62% with 0.34 million shares.

Reuters reports that there are 55.64 million shares outstanding, with 34.33 million free-float traded shares.

The company has a market cap of CA$51.95 million shares and trades in the 52-week period between CA$0.77 and CA$1.81.

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Important Disclosures:

  1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Red Cat Holdings Inc.
  2. Amanda Duvall wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
  3. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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