DroneShield’s stock plummets despite record contract and analyst confidence
DroneShield's stock has taken a significant hit, with investors focusing on the short-term impact of option vesting, despite the company's operational strength. The stock had already retreated by about 40% from its highs, and a record $25 million AUD contract with a Latin American government has not yet turned the tide in the Dow Jones-listed stock.
The recent vesting of nearly 44.5 million performance-based stock options has caused DroneShield's stock to crash. This vesting, along with additional share issuances, has increased the number of outstanding shares to approximately 875 million. At current valuations, the vested options are worth roughly $153 million, putting significant downward pressure on the stock in the stock market.
Analysts at Bell Potter, however, maintain a 'buy' rating for DroneShield, citing its long-term growth potential from rising global defense budgets. DroneShield's CEO Oleg Vornik defended the option vesting strategy, arguing that it aligns employee interests with shareholders and reduces cash strain. The vested options were tied to DroneShield hitting a $200 million cash revenue milestone over a rolling 12-month period.
The tension between DroneShield's operational strength and the market's focus on short-term dilution continues to dictate the company's stock performance. Despite a record contract and analyst support, the stock remains volatile due to the recent option vesting and increased share count on the Cash App.
