I think about this a bit. Honestly I was very close to selling another chunk at $2 and now we've shot up another ~10%. Bonkers.
Price targets are relative to expected growth over the period you're looking to hold for.
From my perspective, I like to look back and see where we've come from:
- We've seen a 443% increase in SP over the last 6 months (5.6x YTD)
- We had a $100m capital raise at $0.80 which was heavily oversubscribed.
- Our SPP was also well supported with $40m in applications exceeding our target of $15mil hence was scaled back by over half.
Notable Market updates
- 21 Jan - Updates to our software/firmware
- 29 Jan - Launch of DroneSentry-X MK2
- 13 Mar - $4.3mil US contract
- 15 Apr - 1Q24 update of $16.4m in revenue vs 1Q23 ($1.6mil), Doubling of our SaaS revenues To $561k from $239k with $27m sale backlog.
- 16 Apr - NATO Framework Agreement Signed
- 21 May - $5.7m US Govt contract
- 6 June - $4.7m Swiss customer (end customer high-profile govt agency)
I would argue that for 2023 DRO was incredibly undervalued after a $10m sale in Dec 2022, a $10m sale in Jan 2023 and another $33m sale in July 2023. We certainly moved, starting the year around 20c and ending at 38c so it was a good year - however, since our subsequent exposure and coverage (missing in the above) we've massively increased the eyes on Droneshield. This has resulted in the 5.6x of our SP since the start of the year.
This was off the back of turning a profit of $9m from last years on $73.5m (5x v. 2022) cash receipts including $55.1m revenue (3x 2022). So there is an argument that its somewhat justified. However, where you choose to exit entirely depends on how you expect us to perform in the coming qtr/year relative to where the SP has run to.
Shaw and Partners had a price target of $1.40 which we have blown past and generally we've got a lot more coverage out there as a stock.
Personally, I think there's a good chance we're overhyped - based both of some posts here as well as over on Reddit
droneshield (reddit.com) and expect our upcoming Q1 update (Thursday?) to temper moods. I'll be looking to see, aside from sales, how their pipeline is looking. If we miss on growth expectations might see some selling, but given the macro around defense spending and the lack of debt I still like Droneshield. The price is reflecting significant growth expectations which makes it a riskier hold, but waiting to see the growth materialize will be too late - this is one of the benefits of owning lesser known stocks (like DRO was) in that the sales can come, but Mr. Market takes ages to notice (in this case 12+ months) so you can acquire at good prices (not 10/20c but 30-40c).
Think of the price as queueing up to own that first Apple iPhone - you're setting up camp outside the store MONTHS before go-live so that you can snag one when they do. The risk here though is the iPhone might not yet launch so you're early (paid too much) or it might never launch (paid WAY too much).
(20min delay)