Red Cat Holdings shares soared by over 25% Monday following the announcement of a partnership between Palantir and Red Cat Holdings to incorporate advanced visual navigation into their drones.
Red Cat’s announcement sparked retail investor interest. Red Cat became the 6th most talked about stock in Reddit WallStreetBets during the last 24 hours. Only Nvidia, Tesla, and other names were higher.
RCAT is a popular topic for retail traders, according to Quiver Quantitative’s data. It has increased by 1,625%.
The stock was up more than 16 percent at 10:29 AM.
Stocks related to drones also enjoy a broad rally
Other drone firms also benefited from the sector’s momentum.
Unusual Machines – a company with ties to Donald Trump Jr. – grew by over 14 percent, and Kratos Defense and Security Solutions grew around 4 percent.
Unusual Machines had risen 9.6% by 10:30am, while Kratos Defense and Security Solutions rose 5.3%.
AeroVironment, Axon Enterprise and other companies also saw gains in excess of 1%.
This surge coincides with increased attention to drones following a mysterious series of sightings that occurred in New Jersey, which sparked speculation.
The FBI stated that the sightings were likely misidentified aircraft. However, these events fueled public curiosity about drones and a surge in interest.
US drone manufacturers could benefit from policy changes
Wall Street believes that Donald Trump’s incoming presidency could have a positive impact on the drone industry.
Elon Musk is a proponent of drones who has been vocal about his views. He will have a significant influence on the technology and defence policies.
Congress also plays a part. Recently passed by the House was a provision of the National Defense Authorization Act that seeks to prohibit DJI, based in China, from selling drones in the US.
This legislation, if passed, could provide opportunities for local manufacturers to gain market share.
In a client note, Louie DiPalma, a William Blair analyst, said that local and state police are using federal counter-drone technology to safeguard stadiums and airports as well as prisons and other public places.
This will result in an increase in investments in drone countermeasures by state and local government agencies in the coming decade.
Grand View Research estimates that the drone market will be worth 30 billion dollars this year.
A compound annual growth (CAGR), of 10.6%, is expected for the sector between 2025 and 2030.
The post Why is drone stock soaring? This post may be updated as new information unfolds.
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