Red Cat Holdings (RCAT 4.25%) stock tumbled 4.9% through 11:50 a.m. ET Tuesday -- that's the bad news.
The good news is that there's no obviously bad news to explain the drop (which suggests it's temporary). No analyst downgrades, no earnings misses, no... massive equity dilutions, either. (At least, not this week).
Image source: Getty Images.
What's new with Red Cat
What is new with Red Cat today actually sounds encouraging: A relationship with rising drone software company Safe Pro Group, which will soon see Red Cat's own Black Widow drones equipped with "AI threat detection capabilities."
(Yes, you heard that right: Red Cat's an artificial intelligence stock now.)
A few months from now, Red Cat drones equipped with Safe Pro software will participate in U.S. Army exercises to demonstrate their ability to fly over terrain and identify landmines, unexploded cluster munitions, and "ambush FPV drones" lurking below. The two companies have been working on this collaboration for the past eight months, and are now ready to demonstrate its effectiveness to their biggest customer.
NASDAQ: RCAT
Key Data Points
What it means for Red Cat
How big an opportunity might this be for Red Cat? Let's look beyond the obvious, shall we? With continuing conflicts in Ukraine, Lebanon, Gaza, and potential flare-ups from Israel to Iran, munitions-hunting drones have an obvious utility in warfare, for keeping troops safe from harm. The even bigger opportunity, however, may come after the shooting stops and peace is declared.
Four years into the Ukraine war, UN experts estimate some 139,000 square kilometers of Ukraine are contaminated by unexploded ordnance and mines, all of which must be located and defused after the war ends. That's not even considering ancient ordnance from old conflicts around the world.
If this technology works, it could open an entirely new market for Red Cat.
