What happened

Shares of AgEagle Aerial Systems (UAVS -6.95%) continued their rapid ascent on Thursday, up 36% for the day and 82% for the year. The drone maker is benefiting from consolidation elsewhere in the industry, which is getting investors excited about other potential targets.

So what

AgEagle shareholders have taken a wild ride over the past year. The company started 2020 as a penny stock valued by the market at less than $10 million. But investors started buying in mid-year on speculation that AgEagle is working with Amazon to develop a delivery drone.

A drone hovering over a field at dawn or sunset.

Image source: Getty Images.

The stock is up 1,900% over the past year, and the company now has a market capitalization of more than $600 million.

Thursday's move is likely tied to an action by a larger drone maker, AeroVironment. AeroVironment is acquiring Arcturus UAV for $355 million in cash and $50 million in stock, adding to its military and special forces offerings.

The deal reinforces the market perception that makers of unmanned aerial vehicles (UAVs) are in demand, adding to the excitement surrounding AgEagle shares.

Now what

Worth noting: AgEagle and Arcturus are two very different companies. AgEagle generated just over $1 million in revenue in the first nine months of 2020, and its business, at least for now, is mostly a collection of state agriculture monitoring contracts.

Obviously, there needs to be much more to justify this stock spike. Amazon has seemingly downplayed any potential link with AgEagle, but the company has hinted it is working with an e-commerce partner.

At best, AgEagle is a company with a lot of potential but still in the early stages of developing it. At worst, the stock is highly overvalued based on a lot of talk but not really much to back it up. I'd advise staying on the sidelines until there is more evidence to suggest there is substance behind the speculation that has sent the stock soaring higher.