Shares of Red Cat Holdings surged over 25% on Monday after news broke of its partnership with Palantir to integrate advanced visual navigation software into its drones.
The announcement ignited retail investor interest, with Red Cat (ticker: RCAT) becoming the sixth most discussed stock on Reddit’s WallStreetBets over the past 24 hours, trailing only names like Nvidia and Tesla.
According to data from Quiver Quantitative, RCAT’s popularity on the forum skyrocketed by 1,625%, making it a standout topic among retail traders.
At 10:29 am, the stock had given up some of the gains, and was trading more than 16%.
Broad rally lifts other drone-related stocks
The sector-wide momentum extended to other drone companies.
Unusual Machines, which has ties to Donald Trump Jr., climbed over 14%, while Kratos Defense and Security Solutions added around 4%.
By 10:30 am, Unusual Machines was trading higher by 9.6% while Kratos Defense and Security Solutions was up by 5.3%.
AeroVironment and Axon Enterprise also notched gains of more than 1%.
The surge comes amid heightened attention on drones after a series of mysterious sightings in New Jersey sparked speculation and increased scrutiny of aerial technology.
Although the FBI has stated that these sightings likely involve misidentified manned aircraft, the events have fuelled public curiosity and driven interest in drone stocks.
Policy shifts could boost US drone makers
Wall Street anticipates that the incoming administration of President-elect Donald Trump could be favourable for the drone industry.
Elon Musk, an outspoken proponent of drone technology, is expected to wield influence in shaping technology and defense policies.
Congress is also playing a role. A provision in the National Defense Authorization Act, recently passed in the House, seeks to ban China-based DJI from selling drones to US entities.
If enacted, this legislation could create opportunities for domestic manufacturers to capture market share.
“On the drone protection side, federal government counter-drone technologies are increasingly being used by local and state law enforcement to protect stadiums, airports, prisons, and other public settings,” said William Blair analyst Louie DiPalma in a note to clients.
“This will likely result in a surge in counter-drone investments by local and state government agencies over the next decade.”
The drone market has been soaring in late 2024, with the global commercial drone industry estimated to be worth $30 billion this year, according to Grand View Research.
The sector is poised for robust expansion, with an anticipated compound annual growth rate (CAGR) of 10.6% from 2025 through 2030.
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