Red Cat Holdings Inc. (RCAT:NASDAQ) [INSERT NEWS]

Maritime Drone Use Evolving

The increasing use of sea drones, or uncrewed surface vessels (USVs), and continually advancing drone technology are rapidly and dramatically changing naval warfare. Proof of this is Ukraine's recent takedowns of two fast Russian fighter jets with a missile launched from a USV, the first ever attacks of their kind, reported Naval News on May 5.

Ukraine used a MAGURA V7, a larger, cleaner and better conceived MAGURA V5 (Maritime Autonomous Guard Unmanned Robotic Apparatus V type), Naval News noted. MAGURA V5 is multipurpose, capable of surveillance, reconnaissance, search and rescue, mine countermeasures, marine protection and combat missions, Sea Waves Magazine described.

Previously, Ukraine had used these sea drones solely to attack and sink ships. For these described recent operations, though, it fired a modifed R73 missile, typically launched from a fighter jet, from the MAGURA V7, a May 3 bulgarianmilitary.com article pointed out. Given the outcome, this was a successful integration of an air-to-air missile onto a sea drone.

"The operation showcases a dramatic evolution in drone warfare and raises questions about the future of military technology and tactics," the writer commented.

Companies in the Emerging Space

Puerto Rico-based Red Cat Holdings is one company in the naval drone space. Last month, the firm began integrating Ocean Power Technologies Inc.'s (OPTT:NYSE.American) WAM-V and PowerBuoy technology platforms into its Teal-2 drones to make them capable of air, sea and subsea defense and security missions, a news release noted.

WAM-V, or wave adaptive modular vessel, is a class of autonomous surface vehicles that uses an articulating suspension system to minimize structural loading, according to the New Jersey-based manufacturer's website. This ultralight, modular vessel can perform in sea conditions that an ordinary boat of similar size cannot. PowerBuoy is an uninterrupted power supply, as it constantly recharges itself by harvesting energy from waves.

The private, Texas-based company Saronic aims to address gaps in U.S. shipbuilding capacity and ultimately deliver the types and quantity of autonomous ships needed to create and sustain the U.S. military’s hybrid fleet. Recently, reported USNI News, Saronic acquired Gulf Craft, a Louisiana-based shipbuilder, for a USV production and prototyping hub.

Also, Saronic introduced the Marauder, its autonomous and unmanned, 150-foot-long surface vessel. It can loiter for at least 30 days, travel 3,500 nautical miles, loiter for at least 30 days and support payloads up to 50 metric tons.

Earlier this year, noted The Robot Report, the company raised $600 million ($600M) to build Port Alpha, a new generation shipyard for large-scale production of medium- and large-class ASVs for defense applications. Saronic is seeking a location for it.

General Dynamics Corp.'s (GD:NYSE) subsidiary, Electric Boat, is producing two fast, Virginia-class, attack submarines, reported Sea Waves Magazine on May 3. This is to fulfill its $18.4 billion ($18.4B) contract with the U.S. Navy, awarded earlier this month.

These corporate undertakings align with U.S. President Donald Trump's push for an overhaul of the country's commercial and military maritime sectors.

"To boost our defense industrial base, we are also going to resurrect the American shipbuilding industry, including commercial shipbuilding and military shipbuilding," Trump said during an address in February to Congress, UNSI News reported.

His April 9 Executive Orders called "Restoring America's Maritime Dominance," called on Administration officials to develop a plan for revamping the U.S. maritime industry.

14.8% Forecasted CAGR For Sector

The outlook of the commercial drone services market between 2025 and 2035 is one of continued growth, according to Fact.MR. It predicts the industry will expand during this period at a 14.8% compound annual growth rate, reaching $30.3B from $7.62B.

The market analysis and insights firm wrote that by early 2025, "the industry was consolidating around scalable, enterprise-level models." Energy, security and logistics companies were deploying drone fleets for regular inspection, real-time monitoring and surveillance.

Looking ahead, "the ecosystem is expected to evolve into a critical pillar of industrial and civic operations," wrote Fact.MR. "With AI, edge computing and onboard sensory technologies reaching new levels of sophistication, drones will play a vital role in autonomous navigation, predictive maintenance and geospatial intelligence."

Analysts Bullish on Stock

Technical Analyst Clive Maund wrote on May 6 that Red Cat's stock is showing several bullish signs. These included its steep drop from the head and shoulders top, it stopping where a double bottom base pattern formed, it starting to complete the double bottom, the accumulation line's positive divergence and upward trending momentum. For these fundamental and technical reasons, the stock looks as though it should start higher again, noted Maund.

"Probably the best tactic for those interested in the stock is to buy a quantity here, aware that it may take some time to work its way through the resistance especially in the $7–9 zone, and when it looks like it is close to accomplishing this, buy some more," Maund recommended. (RCAT's price at last closing was $6.15 per share.)

Michael Latimore, Northland Securities analyst, has a an Outperform rating on Red Cat and a price target suggesting 111% upside from the current share price, Fintel reported. Northland initiated coverage on the drone technology company in March.

Ownership and Share Structure

According to Refinitiv, eight strategic entities own 14.95% of Red Cat. These include Chief Executive Officer (CEO) Jeffrey Thompson with 13.77%, Unusual Machines Inc. (UMAC:NYSE.American) President and CEO Nicholas Liuzza and Red Cat directors.

Numerous institutional investors collectively hold 17.75%. The rest is in retail.

Red Cat's Top 3 overall shareholders are Thompson with 13.77%, The Vanguard Group with 2.98% and Susquehanna International Group LLC with 2.39%.

The drone tech firm has 90.51 million (90.51M) outstanding shares and 76.86M free float traded shares. Its market cap is $536.75M. Its 52-week range is $0.80–15.27 per share.