Tech Co. Uncovers Excellent Growth Opportunity in Pentagon's Drone Dominance Program

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1. Ownership and Share Structure Information

The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.

Red Cat Holdings Inc. (RCAT:NASDAQ), a U.S.-based provider of advanced drone and robotic solutions for defense and national security, responded to the Federal Communications Commission’s (FCC) decision to immediately enforce its ban on the imports and sales of foreign-made commercial and consumer drones and drone components, according to a release on December 23.

The FCC's action adds foreign-manufactured drones and their critical components to the Covered List, effective immediately. This decision follows an interagency review led by the White House and a national security determination that these systems pose "unacceptable risks" to U.S. safety and sovereignty.

"This is a major moment for the American drone industry," said Red Cat Chief Executive Officer Jeff Thompson. "We applaud the Administration’s decision to act with urgency. The FCC’s action sends a clear signal that the U.S. is serious about securing its airspace, backing trusted technology, and leveling the playing field for U.S. manufacturers competing with foreign-subsidized products. What comes next is just as important. U.S. companies should work together to meet the demand this policy will create."

In the release, Red Cat highlighted that while enforcing Section 1709 is a crucial step in protecting American airspace and critical infrastructure, its success depends on the availability of reliable alternatives. Public and private sector customers must have access to cost-effective and capable American-made platforms that meet operational needs.

As the U.S. seeks to reclaim technological leadership in uncrewed systems, Red Cat said it remains committed to collaborating with government agencies and industry partners to develop a secure, resilient, and scalable domestic drone ecosystem.

The company’s Family of Systems includes NDAA-compliant platforms such as the Black Widow™, which are designed and manufactured in the United States to meet the evolving needs of defense and security customers.

SpiderOak to Conduct Platform Assessment

Red Cat announced in a December 16 release that it had selected private company SpiderOak, a leader in zero-trust cybersecurity solutions for space, aerospace, and defense, to perform a comprehensive Blue UAS cybersecurity assessment of its Black Widow™ Short-Range Reconnaissance (SRR) platform.

As part of the Defense Innovation Unit's (DIU) Blue UAS framework, SpiderOak — an official Recognized Assessor — will carry out vulnerability analysis, penetration testing, and Foreign Ownership, Control, or Influence (FOCI) evaluations to support Red Cat's inclusion of the Black Widow™ on the Blue UAS Cleared List, the company stated.

SpiderOak offers a suite of independent cybersecurity evaluation services under the Blue UAS framework, designed to verify and enhance the cyber resilience of unmanned systems before they enter the Department of War supply chain.

For Red Cat's Black Widow™ platform, SpiderOak's team will conduct a comprehensive Blue UAS assessment, including vulnerability analysis, penetration testing, and FOCI evaluations, the release noted. These services provide critical validation that the platform meets stringent U.S. Government cybersecurity, supply chain, and compliance standards.

SpiderOak's methodology integrates advanced threat modeling, secure-by-design analysis, and supply chain forensics to help partners like Red Cat meet or exceed requirements under NIST 800-171, NIST 800-53, and Executive Order 14028, Red Cat said. Through its role as a Recognized Assessor, SpiderOak supports the rapid deployment of trusted, mission-ready systems that advance U.S. defense and intelligence operations across all domains.

"Red Cat is an industry leader pushing the boundaries of all-domain defense operations, and the Black Widow™ platform plays a critical role in ensuring our warfighters maintain situational advantage," said SpiderOak Senior Director of Business Development Michael Carlson. "Our Blue UAS assessment services are designed to deliver outcomes quickly for the warfighter — helping trusted partners like Red Cat validate cyber readiness, achieve certification, and get critical capabilities into the field sooner. By bringing zero-trust principles and a rigorous, data-driven assessment methodology to the forefront, we're enabling faster, more secure deployment of mission-critical UAS across the Department of War."

Jason Gunter, vice president of Tech and Innovation at Red Cat Holdings, added, "Cybersecurity is foundational to trust and mission assurance. Working with SpiderOak ensures that Black Widow™ not only meets Blue UAS standards but sets a new benchmark for how defense-grade UAS platforms should approach cyber protection and supply chain integrity."

This engagement reinforces the continued importance of the DIU Blue UAS program in accelerating access to secure and compliant unmanned systems across the Department of War, the release said. Through its role as a Recognized Assessor, SpiderOak supports industry partners in meeting stringent cybersecurity and compliance requirements while enhancing the resilience of command, control, and telemetry links across contested environments.

In a sponsored commentary on the news, MarketNewsUpdates noted on December 18 that Red Cat was among the companies "leading the way in autonomous and/or artificial intelligence operations."

Expert: Sector Entering 'Multiyear Supercycle'

Based in Puerto Rico, Red Cat is a drone technology company that integrates robotic hardware and software for military, government, and commercial applications.

The company recently released its Q3/25 financial and operational results. Highlights included record revenue of US$9.6 million, a 646% increase year over year, and a strong cash plus accounts receivables balance of US$212.5 million. The Army expanded Red Cat's contract through its SRR UAS Tranche 2 (SRR2) program, increasing its value to about US$35 million. Teal in Salt Lake City, Utah, and FlightWave in Los Angeles, California, recently increased their manufacturing capacity by leasing new and larger facilities.

In a November 24 article, Stone Fox Capital of Seeking Alpha noted that "in a wild swing," Red Cat's stock recently experienced a sharp decline, presenting an attractive entry point. This drop occurred despite the company's strong momentum in the U.S. drone market, new product launches, and growth. Red Cat is expanding into uncrewed surface vessels (USVs), targeting a US$150 million opportunity, and during Q3/25, opened a 155,000-square-foot facility in Georgia, allowing for the production of 500 vessels per year. However, the company significantly lowered its 2025 revenue guidance due to U.S. contract delays resulting from the government shutdown.

In an October 10 research report, Needham's Austin Bohlig highlighted the growth opportunities for Red Cat through the Army's expansion of its SRR2 program, the company's commercial entry into USVs with the potential for fast-tracking, and international defense markets, including the North Atlantic Treaty Organization. "We believe the unmanned aerial systems industry is entering a multiyear supercycle and view Red Cat as uniquely positioned to capture accelerating demand for defense-grade small intelligence, surveillance, and reconnaissance drones as the U.S. looks to restore drone dominance," Bohlig wrote. "We think the company's most significant near-term opportunity is the U.S. Army's Short Range Reconnaissance Tranche 2 (SRR2) program of record, which we view as a transformational contract for Red Cat." Bohlig's rating on RCAT is Buy, and his target price suggests a 134% return from RCAT's November 25 closing price.

The Catalyst: Drone Ecosystem Is Rapidly Evolving

With an increasing number of commercial applications, rising geopolitical tensions, and defense budgets driving military initiatives and the expansion of counter-unmanned aerial systems (C-UAS), the global drone ecosystem is rapidly evolving and expanding. It is expected to more than double in size from US$73 billion to US$163 billion by 2030, reflecting a 14.3% compound annual growth rate (CAGR), according to Grand View Research.

"This growth is largely driven by rapid advancements in drone technology, improvements in battery efficiency, artificial intelligence (AI)-powered autonomous systems, and enhanced imaging sensors, which are further expanding the capabilities of drones across industries," the report stated.

Among the defense, commercial, and counter-drone sectors, the commercial sector is projected to grow the most over the next five to ten years, with an impressive 37% CAGR from this year to 2035, according to a September 2025 Spherical Insights report. This growth would expand the market size to an estimated US$993 billion from US$31 billion. During the forecast period, North America is expected to generate the highest demand, while the Asia Pacific is anticipated to grow the fastest.

Drone manufacturers are continuously experimenting, developing, and improving solutions for a variety of markets and uses. As a result, unmanned aerial vehicles (UAVs) are increasingly being utilized in diverse industries, including logistics, construction, energy, agriculture, delivery, and transportation (air taxis).

A rapidly emerging business model in the commercial drone sector is drone-as-a-service (DaaS). With DaaS, according to Unmanned Systems Technology, companies provide drone technology and services to customers on a subscription or pay-per-use basis, offering access to aerial data collection, mapping, photography, security surveillance, precision surveying, monitoring, and other drone-based solutions without the need to own and operate the technology themselves.

"The DaaS industry outlook is extraordinarily strong, marked by rapid growth, increasing adoption across diverse industries, and significant technological advancements like AI integration," noted a Nov. 13 news release. "The market is projected to reach substantial values in the coming years, driven by the cost-effectiveness and efficiency of outsourced drone services."

Another significant near-term change is the U.S. ban referenced by Red Cat's December 23 release on imports and sales of all foreign-made commercial and consumer drones and drone components, including those by DJI (Da-Jiang Innovations), China's largest drone manufacturer, and Autel Robotics Co. Ltd., Thomas Black, a Bloomberg Opinion columnist specializing in industrial and transportation sectors, wrote on Nov. 20.

Ownership and Share Structure¹

The ownership breakdown of Red Cat is 11.75% by eight strategic entities, 39.44% by more than 240 institutions, and the remainder by retail investors.

The largest shareholder overall is Red Cat CEO Jeffrey Thompson with 10.78%.

The company has 119.37 million shares outstanding, a market cap of US$1.1 billion, and a 52-week range of US$4.58–16.70 per share.