Ondas stock slides as short interest tops 40% and pressure builds

Ondas stock has wavered in the past few months, moving from last year’s high of $15.30 to the current $7.6 mirroring the performance of other drone companies. ONDS was trading at $7.61, down by over 50% from its all-time high.

This retreat has coincided with the ongoing performance of companies in the drone industry. AeroVironment stock has plunged by over 65% from its all-time high, while Kratos Defense & Securities (KTOS) is down by 64% from its peak. 

Other top companies like Red Cat Holdings, Unusual Machines, and Draganfly have all plunged. This plunge is happening even as demand for drones continue rising. 

Ondas Holdings growth is continuing

The most recent results showed that Ondas’ growth was continuing. Its revenue jymped by 13% in the second quarter to $83 million, with its backlog hitting $757 million during the quarter. 

The management believes that the annual revenue will be between $525 million and $550 million this year, with the deal pipeline for the next two years expected at $11 billion. This growth will happen as the United States and other countries boost their investments in drones. 

The recent earnings growth happened under the Core + Growth program, which helped it to secure $175 million in new orders. At the same time, the management has executed some major acquisitions, including DZYNE Technologies and Cyberhawk, which helped to expand its technology and customer-solutions portfolio.

These acquisitions are expected to help its business continue to grow. The average estimate among analysts is that its next quarter’s revenue will come in at $148 million, up by 1,365% on an annual basis. For the year, the revenue is expected to soar by 957% to $536 million, followed by $1.01 billion next year.

Analysts are bullish despite the rising short interest

Despite its strong revenue growth, investors are skeptical about its future, which explains why it has plunged in the past few months. A closer look at the numbers shows that the company has a short interest of 40%, meaning that nearly half of its float is held short. 

The short interest has jumped because of its elevated losses, and the fact that the industry is getting highly competitive. Also, it has spent substantial sums of money on M&A and may need to raise capital. Its outstanding shares have jumped to 529 million from just 40 million in 2022.

In a recent note, Timothy Horan, an Oppenheimer analyst, hiked the target from $16 to $18, while Needham’s Austin Bohlig placed the target at $19. Northland Securities’ Michael Latimore hiked the target from $16 to $18. Other bullish analysts arefrom HC Wainwright, Stifel, and Loop Capital.

Ondas stock technical analysis

ONDS stock chart | Source: TradingView

The daily chart shows that the ONDS stock has slipped in the past few months, moving from $14.10 in June to the current $7.60. It has dropped below the 50-day Exponential Moving Average (EMA) and the 50% Fibonacci Retracement level.

The stock also slipped below the key resistance level of $9.97, its highest point on August 12. Therefore, these technicals suggest that the stock will continue falling, potentially to the next key support level of $6.22. A move below that level will point to more downside.