Drone and drone component manufacturer Unusual Machines Inc. (UMAC:NYSE) announced this week the launch of its Rotor Riot Brave F7 flight controller, which is manufactured in the U.S. and is fully compliant with the National Defense Authorization Act (NDAA).
Flight controllers use sensor data to coordinate the speeds of rotor motors.
The Rotor Riot Brave F7 flight controller is available for pre-sale at an introductory price of US$49.50 (its regular retail price is US$58) on the Rotor Riot website, Unusual Machines said in a release.
"We are currently in the Blue UAS approval process for the Brave F7 Flight Controller. This underscores our commitment to supply chain transparency and regulatory compliance." Said Unusual Machines Chief Executive Officer Allan Evans. "This U.S.-based production is our first step in providing a more secure and reliable supply chain to our consumer, commercial, and government customers."
The company's stock went up from US$1.45 to US$1.67 per share on the release of the news from the Florida-based drone components builder and vendor. After Unusual Machines went public in February at US$3.03 per share, its stock price peaked at US$3.50, then gradually dropped to its all-time low of US$1.04 in mid-May. Since, it has rallied.
The company is a partner of Red Cat Holdings Inc. (RCAT:NASDAQ) and owns two former Red Cat subsidiaries, Rotor Riot, a source of recreational and hobbyist drones, and Fat Shark, a brand of first-person view (FPV) goggles.
Red Cat has tapped Universal Machines to provide the first drone and components for its new FANG line of FPV systems.
"[Unusual Machines] generates US$5M revenue a year with 20–30% year-on-year growth that is expected to continue," Technical Analyst Clive Maund wrote in a June 20 report, rating the stock an Immediate Strong Buy.*
Step Toward 'Suite of American-Made Components'
Unusual Machines said some key features of the controller include its pricing, a STMF722RET6 processor, a Bosch accelerometer and barometer, and 16 megabytes of built-in black box memory.
The company noted the introductory price for the controller expires Aug. 15, and the first orders are expected to start shipping in early August. The controller is also available for wholesale purchase by retail, enterprise, and government customers.
Chief Operating Officer Drew Camden called the controller "a significant milestone for our company" and "the first step on our ambitious roadmap of having a suite of American-made components."
In a June 17 research note, Dr. Ashok Kumar also shared optimism for Unusual Machines, giving the company a Buy rating and a target price of US$4, about a 140% increase from the price at the time this article was written of US$1.67.
"The Brave F7 Flight Controller is designed by our Rotor Riot team with the FPV pilot in mind," said Stacy Wright, president of Rotor Riot. "We are committed to serving our FPV hobby and are proud to offer high-quality, reliable American-made drone components at a very competitive price."
Maund noted that Red Cat Holdings has a lot of faith in the company.
"Of (the shares on issue), almost half, or 47%, are owned by Red Cat Holdings, which was the parent company of Fat Shark and Rotor Riot that the company acquired in February," he noted.
Maund then went to review the charts for Unusual Machines. After his analysis, Maund concluded that the company "is therefore rated an Immediate Strong Buy."
"There are plenty of potential catalysts over the next several months with the seasonal round of government contracts being announced," he wrote.
In a June 17 research note, Dr. Ashok Kumar also shared optimism for Unusual Machines, giving the company a Buy rating and a target price of US$4, about a 140% increase from the price at the time this article was written of US$1.67.
The Catalyst: Market Growing in Multiple Sectors
The drone market is anticipated to grow in both the commercial and defense sectors.
According to a report by Drone Industry Insights, the global drone market size is forecasted to reach US$54.6 billion by 2030, with the commercial market growing at a 7.7% compound annual growth rate (CAGR).
Drone services will remain the biggest segment of the industry, but hardware will grow the fastest, the report noted.
Unusual Machines has a foothold in the commercial drone business; however, it is pivoting some of its focus toward defense contracts. Demand for drones and drone parts in the defense sector is large.
Fortune Business Insights noted that "The global military drone market is projected to grow from US$14.14 billion in 2023 to US$35.60 billion by 2030, at a CAGR of 14.10% during the forecast period."
Streetwise Ownership Overview*As noted by Bloomberg, "Chinese drones command about 90% of the US consumer market and 70% of the industrial one."
The U.S. is attempting to pivot away from China as a supplier. However, legislation to ban such drones that passed in the House of Representatives has so far been left out of a Senate version of the National Defense Authorization Act.
Ownership and Share Structure
About 12.54% of UMAC is owned by management and insiders, according to the company, and about 40% is held by strategic investor Red Cat Holdings Inc.
The rest is retail.
The company's market cap is US$14.65 million, according to Market Watch, with 9.33 million shares outstanding with 2.25 million free float shares.
It trades in a 52-week range of US$5.54 and US$0.98.
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Important Disclosures:
- Unusual Machines Inc. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Unusual Machines Inc. and Red Cat Holdings Inc.
- Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
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* Disclosure for the quote from the Clive Maund source June 20, 2024
- For the quote (sourced on June 20, 2024), the Company has paid Street Smart, an affiliate of Streetwise Reports, US$1,500.
- Author Certification and Compensation: [Clive Maund of clivemaund.com] is being compensated as an independent contractor by Street Smart, an affiliate of Streetwise Reports, for writing the article quoted. Maund received his UK Technical Analysts’ Diploma in 1989. The recommendations and opinions expressed in the article accurately reflect the personal, independent, and objective views of the author regarding any and all of the designated securities discussed. No part of the compensation received by the author was, is, or will be directly or indirectly related to the specific recommendations or views expressed.
Clivemaund.com Disclosures
The quoted article represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks cannot be only be construed as a recommendation or solicitation to buy and sell securities.
