New U.S.-Made Combat Drone Could Disrupt Military Drone Market

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Red Cat Holdings Inc. (RCAT:NASDAQ), a U.S.-based developer of drone and robotic systems for defense and national security, announced the launch of its new FANG line of NDAA-compliant First Person View (FPV) drones. The series begins with the FANG F7, a 7-inch retrievable drone designed for both tactical operations and pilot training.

According to the company, the system was initially conceived within a U.S. military lab program and has since progressed into a field-ready platform. The FANG F7 is part of Red Cat's Arachnid Family of Systems and emphasizes affordability and U.S. sourcing. The company stated that all critical components are independently certified and listed on the Defense Innovation Unit's Blue UAS Framework, with full system approval pending.

Built with a carbon-fiber frame for durability and stability, the drone's retrievable design allows for repeated use, reducing operational costs compared with expendable systems.

CEO Jeff Thompson said in the news release, "With FANG, we set out to deliver something the market hasn't seen before. Working with key partners, we now have an NDAA-compliant FPV drone that's both high-performing and low-cost."

The system debuted publicly at the Premier Drone Competition in Cumberland County, North Carolina, hosted by the Fayetteville Cumberland Economic Development Corporation. Red Cat confirmed the drone will also be displayed at the AUSA Annual Meeting in Washington, D.C. Orders will be fulfilled directly through Red Cat and authorized procurement channels.

Drone Demand Surges Amid Global Defense Modernization

According to a September 10 report from the Army News Service, the U.S. Army had conducted its largest unmanned aerial system flight demonstrations to date during the annual Unmanned Aircraft Systems and Launched Effects Summit at Fort Rucker, Alabama. The event gathered more than 400 stakeholders, including service members, industry experts, and policy leaders, to evaluate new unmanned technologies and training programs.

Col. Nicholas D. Ryan, director of capability management for UAS, said the summit "synchronized all UAS transformation efforts, shared best practices, and rapidly proliferated UAS capability across the Army." He explained that the initiative was part of the Army Transformation Initiative and the White House's Executive Order aimed at advancing U.S. drone dominance.

On October 10, Needham & Company reiterated its Buy rating and raised the price target to US$17.00.

Maj. Gen. Clair Gill, commanding general of the Army Aviation Center of Excellence, noted that the live demonstrations included first-person-view systems and lethal drone exercises, allowing participants to "see the art of the possible" in evolving battlefield environments.

The Army also began developing its first lethal operator course, designed to train personnel in the use of armed small UAS. Gill said the program was intended to become a standardized course similar to Air Assault School, providing Soldiers across commands with the knowledge to employ drones safely and effectively. Col. Joshua Ruisanchez, director of Army aviation capabilities and integration, added that the next phase of UAS modernization would focus on artificial intelligence integration, universal drone control systems, and refined operational designs.

On October 1, the Department of Defense confirmed the continued expansion of unmanned platforms through new contracts. A release from the Army Contracting Command at Aberdeen Proving Ground stated that a Maryland-based defense contractor received a US$982 million award for lethal unmanned systems to support Army missions through 2030. The Department emphasized that the drones under the program were designed to counter both peer and near-peer threats and to provide "organic fire support" for units operating in complex environments.

In an October 9 market report published by FN Media Group, analysts described sustained growth across the global military drone sector, driven by rising defense budgets, emerging technologies, and increased reliance on unmanned platforms for intelligence, surveillance, and reconnaissance. Market Research Future Analysis estimated that the global military drone market was valued at US$13.42 billion in 2023 and projected to reach US$30.5 billion by 2035, representing a 7.09% compound annual growth rate. The report stated that "in areas like North America and Europe, where reputable defense contractors are spearheading innovation and the manufacture of advanced drones, this tendency was clear." It also observed that the integration of artificial intelligence and machine learning technologies had "the capacity to make decisions on their own, increasing battlefield efficacy."

The report concluded with a statement attributed to the U.S. Department of Defense noting that "the increasing reliance on unmanned aerial systems for intelligence, surveillance, and reconnaissance missions underscored a transformative shift in military operations globally."

Independent Analysts Reaffirm Confidence in Growth Trajectory

On August 11, ThinkEquity assigned Red Cat Holdings Inc. a Buy rating and a US$15.00 price target, citing the company's transition from development to production as a key inflection point. The report described Red Cat's integrated "Family of Systems" approach as a competitive differentiator across both aerial and maritime domains. Analyst Ashok Kumar noted that the Black Widow drone had been selected as the sole winner of the U.S. Army's Short Range Reconnaissance (SRR) program of record, calling it "the U.S. Army's next-generation reconnaissance tool at the platoon level."

ThinkEquity also highlighted Palantir-enabled GPS-denied navigation and long-endurance vertical takeoff and landing (VTOL) capabilities as core advantages. The firm projected FY2025 revenues of US$80–120 million, supported by SRR ramp-up and expansion into unmanned surface vessels (USVs).

On October 10, Needham & Company reiterated its Buy rating and raised the price target to US$17.00 following a full day of investor meetings in Boston with Red Cat's CFO. Analyst Austin Bohlig stated, "We are reiterating our buy rating and $17 price target as we came away incrementally more upbeat on Red Cat's positioning within the emerging unmanned supercycle." The report emphasized visibility into SRR2 production, near-term international opportunities, and the company's USV pipeline. It also noted that a full-rate production award under SRR2, expected in Q4 2025, could represent a revenue opportunity of more than US$100 million annually through 2027.

Regarding the company's marine segment, the report stated that Red Cat's Blue Ops division could begin commercial USV shipments in 1H26, with initial unit pricing estimated at US$500,000 per vessel. Bohlig added that Red Cat was "formally positioned for procurement across NATO member nations" following inclusion in the NSPA catalog, with initial international order sizes expected between US$2 million and US$20 million per country.

Building a Domestic Drone Ecosystem

The FANG launch aligns with Red Cat's broader expansion into multi-domain defense technologies, including uncrewed surface vessels (USVs) and command-and-control systems. The company's investor materials indicated that production of the FANG line began in the third quarter of 2025 following NDAA compliance approval.

Red Cat maintains a strong balance sheet, reporting US$65.9 million in cash and US$21 million in inventory and deposits as of June 30, 2025. The firm's portfolio includes Teal Drones, winner of the U.S. Army's Short Range Reconnaissance contract, and FlightWave, which develops hybrid fixed-wing drones such as the Edge 130 Blue.

Future FANG models are expected to integrate with Red Cat's Arachnid ecosystem and its ATAK-compatible command environment, enabling broader interoperability across air, land, and maritime platforms. The company's ongoing U.S. manufacturing investments, including a 155,000-square-foot facility in Georgia for its Blue Ops USV division, position it within the growing push to strengthen domestic defense supply chains.

Red Cat's introduction of the FANG F7 underscores its strategy to deliver compliant, American-made drone solutions to defense and security agencies seeking cost-effective, reusable alternatives to imported systems.

Ownership and Share Structure

Red Cat's market capitalization is approximately US$1.68 billion, with 99.76 million shares outstanding and 85.73 million available for trading.

As of October 2025, institutions owned 24.53%, and insiders, including CEO Jeff Thompson, held about 11.89%. The rest is retail.

It trades in a 52-week range of US$2.66 to US$16.70.