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Red Cat Holdings Inc (RCAT)
NASDAQ:RCAT
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Red Cat Holdings
(NASDAQ:RCAT)
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Rating:54Neutral
Price Target:
$10.50
▲(3.55% Upside)
The overall stock score for Red Cat Holdings is primarily impacted by its poor financial performance, which is a significant concern due to declining revenues and negative profitability. However, the technical analysis provides some positive signals with a bullish trend, which partially offsets the financial weaknesses. The lack of valuation data adds uncertainty, but the technical indicators suggest potential short-term opportunities.
Red Cat Holdings (RCAT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.20B
Dividend YieldN/A
Average Volume (3M)10.78M
Price to Earnings (P/E)―
Beta (1Y)1.03
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees115
SectorIndustrials
Sector Strength72
IndustryComputer Hardware
Share Statistics
EPS (TTM)-0.14
Shares Outstanding118,010,240
10 Day Avg. Volume17,090,128
30 Day Avg. Volume10,779,498
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.52
Enterprise Value/Revenue67.76
Enterprise Value/Gross Profit-631.85
Enterprise Value/Ebitda-12.13
Forecast
1Y Price Target
$16.00Price Target Upside57.79% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Red Cat Holdings Business Overview & Revenue Model
Company DescriptionRed Cat Holdings, Inc., through its subsidiaries, provides various products, services, and solutions to the drone industry. It offers commercial and government unmanned aerial vehicle technology for reconnaissance, public safety, and inspection applications. The company also provides First Person View (FPV) video goggles; and software and hardware solutions that enable drones to complete inspection services in locations where global positioning systems are not available. In addition, it is involved in the sales of FPV drones and equipment primarily to the consumer marketplace. Red Cat Holdings, Inc.is based in San Juan, Puerto Rico.
How the Company Makes MoneyRed Cat Holdings generates revenue through several key streams including the sale of drones and UAV technology, software licensing for drone operations, and training and support services for customers. The company also benefits from strategic partnerships with public safety organizations and defense agencies, enabling it to secure contracts for specialized drone applications. Additionally, recurring revenue is generated through ongoing maintenance contracts and subscriptions for software services, which provide customers with continuous access to updates and support. The growing demand for drone technology in various industries, particularly in public safety and defense, continues to bolster the company's earnings.
Red Cat Holdings Earnings Call Summary
Earnings Call Date:Aug 14, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Dec 22, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant operational advancements such as the launch of the Long Beach factory and strategic partnerships like Palantir, suggesting positive growth prospects. However, there are uncertainties around financials due to CFO transition and additional funding, creating a mixed outlook.Q3-2025 Updates
Positive Updates
Long Beach Facility Launch
The Long Beach factory is operational and shipped its first drones in March, with expectations for monthly shipments as the facility scales and backlog is resolved.
Black Widow Competitive Advantage
Vehicle navigation for the Black Widow is almost complete, providing a unique competitive edge and expected to expand margins. Flight data and tests are promising.
Partnership with Palantir
Red Cat is partnering with Palantir for digital navigation, a critical software feature not yet included in guidance, expected to significantly enhance drone capabilities.
Potential Increase in LRIP
The Low Rate Initial Production (LRIP) is anticipated to be higher than previously reported, with additional contracts expected this year.
Negative Updates
Delayed CFO Involvement
Chris Erickson, the newly hired CFO, was not involved in the 10-K signing due to the timing of his employment, necessitating a brief earnings call.
Uncertainty in Additional Funding
There is uncertainty around receiving an additional $100 million in SRR funds for 2025, though the company is prepared to deliver if secured.
Company Guidance
During the conference call on March 31, 2025, Red Cat Holdings provided several key updates and forward-looking statements. Jeff Thompson, the CEO, announced that the company's Long Beach facility is operational and shipped its first drones in March, with plans to increase production monthly. The Black Widow drone has nearly completed its vehicle navigation feature, which is expected to enhance margins. The company has also signed a features contract for the Black Widow under the SIR program and anticipates signing the LRIP contract soon. International opportunities remain strong, particularly in collaboration with NATO allies. Additionally, Red Cat is integrating Palantir's operating system to improve efficiency and margins and expects significant financial impact from the digital navigation software, although this is not yet included in current financial guidance. The company has requested an additional $100 million for 2025 to support expanding drone capabilities, reflecting the growing importance of drones in modern warfare. A more detailed update is anticipated at an upcoming Investor Day Town Hall.Red Cat Holdings Financial Statement Overview
Summary
Red Cat Holdings is facing significant financial challenges with declining revenues, negative profitability, and cash flow issues. The company needs to address its operational inefficiencies and improve its revenue generation to stabilize its financial position. While the debt-to-equity ratio is moderate, the negative return on equity and margins highlight the need for strategic improvements to enhance shareholder value.Income Statement
Red Cat Holdings has shown a declining revenue trend with a significant negative revenue growth rate of -25.23% in the TTM period. The company is experiencing negative margins across the board, including a gross profit margin of -1.25% and a net profit margin of -456.69%, indicating substantial losses. The EBIT and EBITDA margins are also deeply negative, reflecting operational inefficiencies and high costs relative to revenue.25
Negative
Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio of 0.96, suggesting a balanced approach to leveraging. However, the return on equity is significantly negative at -169.59%, indicating that the company is not generating returns for shareholders. The equity ratio is relatively stable, but the overall financial health is compromised by the negative profitability metrics.40
Negative
Cash Flow
Cash flow analysis reveals a challenging situation with negative operating cash flow and free cash flow. The free cash flow growth rate is positive at 34.16%, but this is overshadowed by the negative operating cash flow to net income ratio of -1.07, indicating cash flow issues. The free cash flow to net income ratio is slightly positive at 1.02, suggesting some alignment between cash flow and reported earnings.30
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 9.16M | 7.28M | 17.84M | 9.91M | 6.43M | 5.00M |
| Gross Profit | -982.22K | -2.03M | 3.68M | -336.80K | 925.51K | 1.07M |
| EBITDA | -51.15M | -36.50M | -17.46M | -25.29M | -11.28M | -11.98M |
| Net Income | -62.15M | -65.42M | -24.05M | -27.09M | -10.38M | -14.45M |
Balance Sheet | ||||||
| Total Assets | 121.37M | 55.60M | 48.54M | 60.19M | 85.08M | 11.69M |
| Cash, Cash Equivalents and Short-Term Investments | 65.93M | 9.15M | 6.07M | 16.07M | 48.88M | 277.35K |
| Total Debt | 21.92M | 1.97M | 2.27M | 2.08M | 2.97M | 2.02M |
| Total Liabilities | 25.80M | 5.48M | 4.97M | 5.58M | 7.16M | 6.43M |
| Stockholders Equity | 95.57M | 50.12M | 43.56M | 54.61M | 77.92M | 5.27M |
Cash Flow | ||||||
| Free Cash Flow | -42.00M | -31.05M | -18.85M | -31.65M | -16.38M | -1.40M |
| Operating Cash Flow | -41.29M | -30.80M | -18.60M | -29.20M | -16.02M | -1.40M |
| Investing Cash Flow | 3.70M | 4.24M | 13.57M | 29.59M | -46.60M | -48.37K |
| Financing Cash Flow | 92.92M | 19.39M | 7.80M | -1.22M | 66.43M | 1.49M |
Red Cat Holdings Technical Analysis
Positive
10.14
Price Trends
9.52
Positive
8.44
Positive
8.12
Positive
Market Momentum
0.39
Positive
51.29
Neutral
18.97
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCAT, the sentiment is Positive. The current price of 10.14 is above the 20-day moving average (MA) of 9.92, above the 50-day MA of 9.52, and above the 200-day MA of 8.12, indicating a bullish trend. The MACD of 0.39 indicates Positive momentum. The RSI at 51.29 is Neutral, neither overbought nor oversold. The STOCH value of 18.97 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RCAT.
Red Cat Holdings Risk Analysis
Red Cat Holdings disclosed 46 risk factors in its most recent earnings report. Red Cat Holdings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Red Cat Holdings Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
58 Neutral | $898.13M | -10.55 | -12.73% | ― | 2.08% | -113.97% | |
54 Neutral | $1.20B | ― | -100.48% | ― | ― | ― | |
54 Neutral | $347.20M | -1.53 | -11.18% | ― | 27.39% | -64.74% | |
51 Neutral | $398.87M | -2.37 | -60.06% | ― | -9.11% | 58.95% | |
50 Neutral | $372.48M | -0.89 | -93.80% | ― | 82.61% | 42.42% | |
43 Neutral | $69.43M | -0.10 | -122.95% | ― | 1.90% | 93.50% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
RCAT
Red Cat Holdings
10.14
7.60
299.21%
DDD
3D Systems
3.11
0.27
9.51%
NNDM
Nano Dimension
1.59
-0.86
-35.10%
UAVS
AgEagle Aerial Systems
2.04
-2.66
-56.60%
CAN
Canaan
0.79
-0.22
-21.78%
CRSR
Corsair Gaming
8.47
1.51
21.70%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.