Drone technology company Red Cat Holdings Inc. (RCAT:NASDAQ) announced it has received authorization from the Federal Aviation Administration (FAA) to operate unmanned aircraft systems (UAS) in U.S. airspace without broadcasting remote Identification (Remote ID) information, specifically for the purpose of aeronautical research.
Remote ID regulations are often referred to as a "digital license plate" for drones and play a vital role in safety and security in the National Aerospace System (NAS), the company said in a release.
Red Cat's authorization to operate drones without broadcasting Remote IDs will give valuable data that may inform future FAA policies and the development of drone technologies, Red Cat said.
"This authorization highlights Red Cat's commitment as an industry leader to work closely with the FAA on drone requirements and operations in the national airspace system," said Red Cat Chief Executive Officer Jeff Thompson. "We are proud to be among the first companies in the United States authorized to conduct research operations without broadcasting Remote ID. This will help accelerate the testing and development of safe and effective drone solutions that support warfighters globally."
After the company announced a strategic partnership last month with Palantir Technologies Inc. (PLTR:NASDAQ) to enhance the capabilities of its Black Widow drones, Technical Analyst Clive Maund noted that the stock broke higher on a pickup in volume, "which is bullish."
"We took a good profit in drone stock Red Cat Holdings Inc. towards the end of November," wrote Maund. "However, we sold too early as it continued even higher for a while before reacting back. The reaction brought it back on declining volume to the vicinity of its 50-day moving average, where it was again a Buy,"
Maund continued, "Even though Red Cat is at a historically high price, it is viewed as a Buy again here as a momentum play."
Shaping the Future of Drone Operations
The authorization announced Wednesday reinforces Red Cat's ongoing collaboration with the FAA to shape the future of drone operations in the NAS, the company said. Issued under Title 14 Code of Federal Regulations (14 CFR) § 89.120, the approval allows Red Cat to advance aeronautical research while adhering to strict operational and safety requirements.
Red Cat said the authorization allows it to conduct aeronautical research in "controlled conditions," and the company must file mission notices one to three days beforehand and "adhere to all applicable airspace rules and protocols."
The authorization was effective immediately and will remain valid through January 31, 2028, unless it is extended.
Palantir Partnership
The partnership with Palantir builds on the Black Widow's recent selection for the U.S. Army's Short-Range Reconnaissance (SRR) Program, a key initiative focused on deploying portable, cost-effective drones for battlefield intelligence, surveillance, and reconnaissance.
Technical Analyst Clive Maund continued, "Even though Red Cat is at a historically high price, it is viewed as a Buy again here as a momentum play."
Palantir's VNav technology utilizes onboard satellite imagery and advanced artificial intelligence to enable precise, independent navigation. The software mitigates long-range inertial drift by matching the drone's position to visual satellite references, while the Warp Speed system optimizes production workflows, supply chains, and quality assurance processes for Black Widow drones.
"Equipped with Palantir's visual navigation and artificial intelligence, the Black Widow will be among the most capable drones ever fielded by the Department of Defense, compact enough to fit in a rucksack," Thompson said at the time.
The Black Widow's classification as Blue UAS — or certified for government use — provides a competitive advantage in securing U.S. military contracts.
Further opportunities lie in international markets, with the Black Widow already deployed by NATO allies, including operations in Ukraine. The anticipated passage of the American Security Drone Act (ASDA) could expand the addressable market for domestic drone manufacturers by curtailing reliance on foreign-made systems.
Large Pipeline
Red Cat's pipeline features a backlog of contracts reaching US$7.4 million as of the latest quarter. The company is also scaling its manufacturing capabilities, increasing production capacity toward 1,000 units per month at its state-of-the-art facility in Salt Lake City, Utah.
On December 3, 2024, Intro-act's Monthly Newsletter highlighted the selection of Red Cat's Teal 2 drone for the SRR Program of Record, stating that the product "stood the test and was selected after the meticulous screening process."
Additionally, Red Cat's recent contract with the Royal Australian Navy for its FlightWave Edge 130 Blue systems was cited as evidence of the company's expanding global footprint.
Intro-act concluded, "Red Cat's focus on developing advanced drone intelligence solutions for U.S. military forces and NATO allies positions it well in the dynamic defense sector."
The Catalyst: Significant Growth Expected in Market
The global unmanned aerial vehicle market is experiencing significant growth, projected to expand from US$24.72 billion in 2020 to US$70.91 billion by 2030, representing a compound annual growth rate (CAGR) of 11.7%, according to a report by Allied Analytics LLP on December 16.
North America has been the leading revenue contributor, with its market size expected to grow from US$9.80 billion in 2020 to US$24.22 billion by 2030, while the Asia-Pacific region is forecasted to see the highest CAGR of 15.6% over the same period.
Streetwise Ownership Overview*Key drivers of this expansion include the increasing adoption of UAVs across military, law enforcement, and commercial applications, along with the growing demand for high-tech surveillance and imaging systems in industries like construction, mining, and agriculture. The rotary wing segment is anticipated to dominate market growth due to its versatility and adaptability.
Ownership and Share Structure
According to Refinitiv, management and insiders own just over 19% of Red Cat, including CEO Thompson, who holds 15.45%.
On Wednesday, Bloomberg reported that Director Nicholas Liuzza was among insiders who sold US$1.75 million of shares in the company after the stock rose 15% in the previous session. Liuzza sold shares worth US$1.08 million.
Institutional investors own about 14%. The Vanguard Group Inc. has 2.87%, AWM Investment Co. owns 2.25%, and Pelion Venture Partners has 1.12%.
The rest is in retail.
Red Cat has a market cap of US$948.3 million. Its 52-week range is US$0.56−15.27.
| Want to be the first to know about interesting Technology investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. | Subscribe |
Important Disclosures:
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of 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.
For additional disclosures, please click here.
