How to Invest in Anduril Pre-IPO

Global conflicts have caused an especially high increase in tensions over the past few years, leading investors to recognize the value of defense exposure in their portfolios. Taking a different approach to defense, Anduril prioritizes software over the traditional defense industry's business of building battleships, tanks, fighter jets, and the like.

The bedrock of Anduril's business is its open software platform, Lattice, which it characterizes as "an autonomous sensemaking and command & control platform that serves as the core platform for our suite of capabilities." But that's not to say the company is completely ignoring physical assets. In addition to its Lattice platform, Anduril designs and manufactures drones and solid rocket motors.

With its emphasis on autonomous systems, Anduril is particularly appealing to investors who see the massive growth opportunities of businesses specializing in artificial intelligence (AI). However, the company isn't focused solely on its AI platform. In September 2023, Anduril completed its acquisition of Blue Force Technologies, a developer of combat-capable drones.

Investors interested in fortifying their portfolios with Anduril stock have various things to consider, such as how to buy shares, when it will hold its potential initial public offering (IPO), and what alternative investment opportunities exist.

Publicly traded?

Is Anduril publicly traded?

As of April 2024, Anduril was a privately held company, disappointing investors looking to fortify their portfolios with its stock. While retail investors are out of luck, the company has drawn ample attention from several venture capital firms, such as Andreessen Horowitz and Valor Equity Partners, which have both participated in Anduril funding rounds.

When will it IPO?

When will Anduril IPO?

Buying IPO stocks offers rare investment opportunities for people willing to accept a fair amount of risk. And while several companies are planning to go public in 2024, it's highly unlikely that Anduril will find itself on the IPO calendar anytime soon.

Speaking with defense industry news website Breaking Defense, Palmer Luckey, a co-founder of Anduril Industries, said in September 2023 that while he was interested in holding an IPO, he didn't have a specific time frame. Luckey suggested it was more reasonable to consider 2026 as a possible year for the company to hit the public markets.

How to buy

How to buy Anduril stock?

While most investors will be disappointed to learn that Anduril stock is unavailable to them, accredited investors may be able to pick up shares prior to the stock holding an IPO. For those who qualify as accredited investors, platforms such as Forge Global (FRGE -1.03%) allow them to invest in privately held companies like Anduril.

Even if you don't qualify as an accredited investor, you're not completely out of options. There are publicly traded companies with businesses similar to Anduril.

Step 1: Open a brokerage account

Stock investing is a great approach to building personal wealth, but it requires a little work to get going. One of the first steps to take is to open a brokerage account so you can buy and sell stocks. Of the numerous available options, inexperienced investors may want to consider a brokerage account with Fidelity, which offers zero-commission online stock trades.

Step 2: Figure out your budget

With your new brokerage account ready to go, you'll now want to decide on a budget. Consider your monthly expenses, long-term financial goals -- including funding savings accounts and emergency funds -- and other factors that may affect your investing budget. Remember that investing is a marathon, not a race. So, don't feel pressured to invest too much when starting out.

Step 3: Do your research

Successful investors know the value of doing their due diligence. These days, there are plenty of resources that can help with identifying potential stock purchases. While Anduril stock may not be an option for ordinary retail investors, there are comparable companies that many may find compelling.

1. Lockheed Martin

With a market capitalization of more than $108 billion, Lockheed Martin (LMT -0.41%) is one of the largest defense stocks available to investors, based on market cap. Unlike Anduril, Lockheed Martin manufactures aircraft, ships, and other defense hardware.

For example, Lockheed Martin produces the world's most advanced fighter jets, such as the F-16 and F-35 crafts used in maritime operations, and a wide range of other assets used by various military branches. While Lockheed Martin is committed to manufacturing physical assets that operate on the battlefield, it also focuses on incorporating AI solutions.

For example, in April 2024, Lockheed Martin announced it had received an award for as much as $4.1 billion from the U.S. government's Missile Defense Agency to advance the Command, Control, Battle Management, and Communications (C2BMC) system, which uses AI and machine learning (ML) to "improve the ability to detect, track, target, engage and assess emerging threats," according to the company.

2. Northrop Grumman

Like Lockheed Martin, Northrop Grumman (NOC -1.48%) is a major defense contractor that produces assets used on land, in the air, and at sea and resources used in cyberwarfare. Working to provide its customers an edge on the frontlines, the company is embedding AI in numerous ways.

In collaboration with Palantir (PLTR 3.33%), Northrop Grumman announced in March 2024 that it's developing the Tactical Intelligence Targeting Access Node (TITAN) ground system for the U.S. Army. Leveraging the power of AI and ML, TITAN will use intelligence data from sensors to provide advanced targeting information.

Northrop Grumman is also exploring AI for operations conducted in the wild blue yonder. In 2022, the Defense Advanced Research Projects Agency awarded Northrop Grumman a contract to develop a prototype AI assistant to help pilots perform various in-flight tasks.

3. Kratos Defense & Security Solutions

Investors attracted to Anduril's drone exposure may find Kratos Defense & Security Solutions (KTOS 2.18%) more appealing. In addition to land-based drones, Kratos offers uncrewed systems that operate in the air and at sea. The company's offerings also include space-based systems, training systems, and missile defense, among others.

Demonstrating its commitment to AI, Kratos is partnering with Shield AI, a company that's developed an AI pilot. In April 2024, the two companies announced a successful test flight of the AI pilot on the Kratos Tactical Firejet. This achievement has motivated the two companies to collaborate on expanding the potential use of the AI pilot in the Kratos Valkyrie, a stealth, uncrewed tactical drone.

Step 4: Place an order

After making some final decisions, you'll be able to celebrate having the first stock in your portfolio. First, you'll have to decide how many shares to purchase. Next, you'll have to choose the type of order you want to make: a market order or a limit order. The Motley Fool recommends a market order since it guarantees you buy shares immediately at market price.

With these questions answered, you're ready to click the buy button. Now, take a moment to congratulate yourself on taking a step toward building your personal wealth.

Profitability

Is Anduril profitable?

As a privately held company, Anduril isn't required to report regulatory financial statements, like 10-Qs and 10-Ks. Consequently, investors don't have much insight into the company's financial circumstances, including whether the company is booking a profit.

But that's not to say there isn't some speculation regarding the company's financial situation. Sacra, a business research platform, estimates Anduril generated revenue of $342 million in 2023, rising from a projected $236 million in 2022.

Should I invest?

Should I invest in Anduril?

Ordinary investors interested in Anduril stock are out of luck. When the company plans on holding an IPO, however, it will have to submit regulatory filings that provide perspective on its financial situation. Then, investors can better determine whether an investment in the company is right for them.

ETF options

ETFs with exposure to Anduril

As it's unavailable on public markets, investors can't gain exposure to Anduril stock through an exchange-traded fund (ETF). However, there are other ETF options for investors to consider, such as defense-focused ETFs, that include exposure to companies operating in areas comparable to Anduril.

• SPDR S&P Kensho Future Security ETF (FITE -0.29%): With 59 holdings, this ETF is focused on defense stocks, including AI companies, robotics companies, and drone companies. AI semiconductor manufacturer Broadcom (AVGO 3.38%) is the ETF's largest holding, while cybersecurity specialist CrowdStrike (CRWD 1.83%) is the third-largest holding. This ETF has a 0.45% gross expense ratio.
• ARK Autonomous Technology & Robotics ETF (ARKQ 0.56%): Investors less intent on defense exposure and more interested in broader growth opportunities related to AI and robotics will want to consider this ETF. In addition to defense drone stocks, like Kratos Defense & Security Solutions and AeroVironment (AVAV 1.33%), the Cathie Wood ETF includes Tesla (TSLA 0.96%) and positioning company Trimble (TRMB -6.29%) as top holdings. This ETF has a 0.75% expense ratio.
• iShares U.S. Aerospace & Defense ETF (ITA 0.33%): For those interested in a more conservative ETF, this ETF is worth consideration. The top holdings are defense industry stalwarts RTX (RTX -0.59%), Boeing (BA 0.22%), and Lockheed Martin. Together, these top three positions represented more than 45% of the ETF's holdings as of April 2024. This ETF has a 0.40% expense ratio and makes quarterly distributions.

Related investing topics

The bottom line on Anduril

With global tensions showing little sign of ebbing, investors recognize the value of positions in leading defense companies like Anduril. But it will be some time before the company holds an IPO and gives them the opportunity to invest in it.

Even so, stocks that offer similar exposure to the defense industry -- stocks like Lockheed Martin, Northrop Grumman, and Kratos Defense & Security Solutions -- are available on the public markets right now. Additionally, investors interested in broader exposure to companies like Anduril may consider ETFs that hold AI- and defense-focused companies.

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