Quick Read
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Ondas (ONDS) jumped 15% to about $5 on new contracts, yet it still trails 2025 by 47% as earnings approach.
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Red Cat (RCAT) rose 14% and AeroVironment (AVAV) 9%, which suggests the lift reflects a sector-wide rebound after the post-election selloff.
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Guidance of $140 million to $155 million in Q3 revenue sets a high bar, and $199 million in quarterly spending adds risk.
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Drone and defense-tech stocks are bouncing back after a post-election decline, and Ondas Holdings( NASDAQ:ONDS ) is leading the rebound with fresh contract news and an earnings report ahead. Ondas stock is at $5.19, up 15% in afternoon trading. That gain still leaves Ondas stock down 47% year to date (YTD).
A wave of selling hit the group on worries that the Democrats' midterm sweep could squeeze defense budgets. Ondas and its drone peers are now winning back some of that ground, and a rebound after such a steep decline may be one way to read the move.
Ondas Adds Orders and Expands ULTRA Production
On November 5, Ondas announced plans to expand production of its ULTRA long-endurance aircraft, including in the U.S., with a target of 10 aircraft monthly by 2028. Ondas also signed a deal to buy Stemme, the maker of the ULTRA airframe. A day earlier, on November 4, Ondas disclosed multimillion-dollar counter-drone contracts with government customers in Europe and Asia.
Since June 30, Ondas has disclosed more than $270 million in total orders. Ondas has also pointed to a $56 million award for Electronic Safe & Arm Devices supporting a European loitering munition program.
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Ondas Earnings Report Sets a High Bar
Heading into its upcoming earnings report, Ondas has guided to Q3 2026 revenue of $140 million to $155 million, well above its Q2 2026 revenue of $83.8 million. For the full year, Ondas expects revenue of $525 million to $550 million. Management is targeting adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) positive for the company's operating platform by Q4 2026 and company-wide by Q4 2027.
Spending is the main pressure point: Ondas' Q2 operating expenses reached $199 million, far above its revenue for the period. Rapid acquisitions add integration risk as the company integrates new businesses, including the pending Stemme purchase.
Budget Fight Shapes the Drone Trade
Jefferies expects the 2027 defense budget to land closer to the House's $1.15 trillion proposal than the administration's $1.5 trillion request. TD Cowen's Roman Schweizer stated, "Trump branded programs are dead." Drones and counter-drone systems, core products for Ondas, could still be seen as a higher priority than big-ticket programs.
The administration's fiscal 2027 request includes $53.6 billion for autonomous systems procurement, domestic production capability and advanced capabilities. Hiring surged in October, with 165,000 jobs added, and a broader rebound in growth stocks is supporting risk appetite for names like Ondas.
What the Peer Group Says About Ondas
Red Cat Holdings( NASDAQ:RCAT ) stock is at $3.87, up 14%. Meanwhile, AeroVironment( NASDAQ:AVAV ) stock is at $111.12, up 9%. Both companies are moving with the sector rebound. Red Cat's gain runs nearly in step with Ondas', which suggests much of the lift is sector-wide.
Unusual Machines( NYSEAMERICAN:UMAC ) is also part of this drone peer group. Kratos Defense & Security Solutions( NASDAQ:KTOS ) has a broader business than the pure-play drone names. With a business spanning hypersonics, jet engines and space, Kratos has less direct drone exposure than Ondas.
How Ondas Differs From Red Cat and AeroVironment
Ondas has built its defense portfolio through an aggressive acquisition campaign spanning counter-drone systems, aerial and stratospheric surveillance, loitering munitions and ground robotics. Red Cat runs a Family of Systems led by the Black Widow small drone, and it has pushed into uncrewed surface vessels through Blue Ops. Both companies are smaller, fast-growing defense names still working toward positive.
AeroVironment is the established prime in the group, selling Switchblade loitering munitions, the LOCUST laser weapon and Titan counter-drone systems. Unusual Machines sits further down the supply chain, selling motors, cameras and batteries that meet National Defense Authorization Act (NDAA) sourcing rules to drone makers. That mix of scale and focus contrasts with Ondas, which still has integration work ahead as its acquired units come together.
What Ondas' Next Report Could Decide
Ondas still has to show whether its order book turns into revenue at the pace its Q3 guidance implies. Solid results could support the case that the drone selloff ran too far, while a shortfall or wider losses could renew concerns about spending and acquisition integration.
Defense budget headlines may swing Ondas and the whole group as well, so watch for any sign that Congress cuts drone and counter-drone funding. Investors should be careful and watch how the defense budget fight settles.
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