Vection inks defence contract over $7M. So why are shares down?
Vection Technologies (ASX:VR1) has announced its receipt of a A$7.1M defence contract extension “for a European client” – but defying a recent surge for defence-facing stocks, shares were down heading into the second hour of Tuesday trades.
VR1 has long offered VR training programs for members of law enforcement, and the company has recently started pivoting into AI (because of cause it has) – but the core product remains training software intended for use by wearing a headset.
Vection’s AI pivot began back in February with an A$4M deal using Dell Tech alongside an undisclosed existing client. When it comes to defence contracts, the company has been vying for that space since at least 2023.
Vection has also offered similar tech to the medical sector in some jurisdictions. But that doesn’t answer our question.
Why are shares down? Taking a look at today’s announcement, what Vection is actually selling to its undisclosed client is “it’s AI product” [sic]. What exactly that AI product is wasn’t particularly clear.
But a look at their website shows the company is just offering a ChatGPT model slightly played around with so that it won’t say offensive things and redirect questions back to workplace policy guides. Vection calls this the “Algho Appliance.”
Don’t take my word for it – thats’s what Vection says on its website: “At its core, it features fine-tuned Large Language Models (LLMs) specifically optimized for enterprise applications, ensuring context-aware responses and domain-specific understanding.”
So there’s that. Interestingly, the client apparently has no termination rights, either.
Of course, it could just be profit taking. The company’s one year returns are up +115% and the nanocap definitely fits in with overarching remilitarisation trends, especially given the rise of headset-controlled drone warfare.
Because the company is pivoting into selling clients its workplace management ChatGPT model, perhaps instead of things like drone warfare, could be another possibility explaining downside on Tuesday.
VR1 last traded at 4.3cps.
This article is not financial advice.
Vection inks defence contract over $7M. So why are shares down?
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