More or less exactly one year after DroneShield (ASX:DRO) prices crashed after hitting a key level above $2.30 a share in 2024; after another sustained run in the last few months, DroneShield has again sold off after it hit over $4/sh.
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The coincidence has had many on HotCopper and elsewhere online wondering how bad the carnage will be this time around – in 2024, it took about three weeks for the sell-off to send Droneshield plummeting.
In this case, the price started declining again on Thursday – but so far, the carnage hasn’t been too bad.
In fact, on a one-week basis, even including a decline on Thursday and Friday (shares $3.41/sh at time of writing;) Droneshield’s one-week returns are still up +28%.
Which underscores that, once again, the stock has been running hard – and fast. The kind of thing that, rightly, makes investors nervous.
Right now, at $3.41/sh, the company has a market cap just under $3B. That followed the 2024 scenario where the market cap hit $2B, on revenues absolutely nowhere near that number.
And this time around, it’s the same story. Despite a recent $60M contract, we’re far off justifying that $3B. At least when it comes to fundamentals, as opposed to momentum investing.
However, there is some hope for investors who want to see the price stay above $3/sh. The militarisation thematic has only increased YTD, especially seeing as two major wars show no signs of stopping (no matter what Trump says), NATO has agreed to spend more on defence, and Australia’s doing the same.
Then there are short sellers. Or rather, the lack of them.
In February of this year, shorts on DRO hit 10% of shares on issue. That was enough to see the share price fall under 70c – but in the months since, shorts have decreased to less than 2% of shares on issue.
DRO last traded at $3.41/sh.
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