Drone Manufacturer Finds US$170M Market Breakthrough in Defense Sector

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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.

It's rare in an emerging industry to recognize a specific year as an "inflection point" while it's unfolding — this usually becomes clear in hindsight. However, for the drone industry, 2025 was undeniably pivotal, no matter how you view it, according to a piece by SkyfireAI co-founder and Chief Strategy Officer Matt Sloane for DroneLife on January 6.

"Whether you think we took a monumental leap forward, or a gargantuan step backwards, you're right!" Sloane wrote. "2026 will be defined by the 'fallout' or 'benefits' of what happened last year, depending on which side you sit."

He continued, "And last, but certainly not least … CHINA! The issue that continues to plague the industry and dominated every conversation about what’s next for the industry."

Just before Christmas, the Federal Communications Commission did what many anticipated by adding Chinese powerhouses DJI and Autel to the Agency’s Covered List, effectively banning these companies from licensing new drone models in the U.S. They took it even further by including all foreign-made drones and components on the Covered List.

"Let’s take a look at what this and all the rest of it means for the drone industry this year," he said.

The U.S. Army, along with the Department of War, will gain aggressive and far more adaptable new purchasing authority. This shift will move the focus from long-term, large-scale programs dominated by big companies to include smaller, innovative firms. More consolidation is inevitable to keep pace with the rapid changes expected in 2026.

"There are ALOT of people across the industry who are scared," he wrote. "It's a tough time, even for the 'winners' here, who source a lot of their parts from overseas (not just from China), so there will be strife."

Unmanned Supercycle Set to Accelerate in 2026

On December 2, the Department of War announced the Drone Dominance Program (DDP) — Request for Information (RFI), marking the initial step toward what is anticipated to be one of the largest procurement cycles for low-cost, attritable small UAS in U.S. history, according to a December 3 research note featuring the company by Needham Analyst Austin Bohlig. The RFI outlines a clear path for US$1 billion in orders, covering approximately 340,000 drones over four phases in the next two years. This development is considered highly significant, as it supports the belief that an unmanned supercycle is set to accelerate substantially in 2026.

One company uniquely positioned to benefit from many of these changes is Unusual Machines Inc. (UMAC:NYSEAMERICAN), which has invested in U.S.-based manufacturing, including domestic motor production and dedicated facility to support future production activities.

The company saw its stock price increase an overall 155% between April and the end of the year.

On December 22, the company announced it received a purchase order from Performance Drone Works (PDW) valued at US$3.75 million. This order aims to support the expansion of PDW's AM-FPV program and enhance investment in the U.S. small Unmanned Aerial Systems (sUAS) supply chain, according to UMAC.

"PDW is an impressive company building mission-focused drone platforms in the U.S.," said Unusual Machines CEO Allan Evans. "We're pleased they have chosen to work with us as a strategic supplier in strengthening the domestic drone infrastructure. This order reflects the progress we've made in building a domestic manufacturing base for critical drone components aligned with national priorities."

"While the program is structured to accommodate several drone OEM vendors, we believe Unusual Machines (UMAC) is particularly well positioned to capitalize on this opportunity, given its leadership as one of the few domestic suppliers of low-cost, flight-critical components essential for meeting the program’s supply-chain requirements," Bohlig wrote. "Based on the anticipated unit volumes, we estimate this represents a US$170 million addressable market opportunity for UMAC across the program’s initial phases."

'Speed to Field' Unifies Portfolios

The aerospace and defense industry is at a critical juncture as it moves into the latter half of the decade, according to the "2026 Aerospace and Defense Industry Outlook" published November 13 by Deloitte Research Center for Energy and Industrials.

"Influences that have shaped the sector in recent years — such as digital transformation, supply chain disruptions, talent shortages, and geopolitical events — are intersecting with new drivers like agentic AI, emerging vehicles, and the swift advancement of autonomous systems," the report said.

Defense priorities are shifting towards accelerating the deployment of AI-enabled systems and collaborative combat aircraft, the article said.

"'Speed to field' is becoming the unifying metric across portfolios," Deloitte analysts wrote.

Drones are being utilized in various applications, including AI-driven navigation, defense contracts, emergency response technologies, and logistics automation, among others, Kate Stalter wrote for U.S. News & World Report on December 4.

Military use of drones is also on the rise. "Roughly every 20 years, new technologies arise that change the nature of warfare. Drones are the latest innovation, and the war between Russia and Ukraine is the laboratory highlighting their importance for future conflicts around the world," Scott Sacknoff, president and index manager at Spade Defense Index, told Stalter.

Spade is a company based in Bethesda, Maryland, that measures the performance of companies involved in the development, manufacturing, and operations of U.S. defense, security, and aerospace industries. The Invesco Aerospace & Defense exchange-traded fund (PPA) tracks the Spade Defense Index.

UMAC a '2026 Top Pick,' Analyst Says

In an updated research note on January 5 declaring UMAC a "2026 Top Pick," Needham's Bohlig said his firm believes "the unmanned supercycle will meaningfully inflect in 2026 and (we) expect this will mark the first of multiple record-setting years for drone procurement. Given UMAC's unique positioning as a leading domestic supplier of low-cost, drone components, we see multiple catalysts materializing in 2026 that position the company to outperform."

UMAC enters 2026 with solid visibility, bolstered by approximately US$20 million in backlog, with the majority anticipated to be shipped in the first half of the year, Bohlig noted.

"But we see meaningful upside potential as several high-volume programs begin to scale in 2026," he said. "While we do view scaling as the primary risks, we see a clear path to breakeven in 2H26 which we view as another important milestone for the stock. Finally, we believe 2026 could represent a transformational M&A year for UMAC, providing additional tailwinds in 2026."

Since September 2025, UMAC has announced several new orders from various drone OEM customers, Bohlig wrote.

"We estimate these orders translate into a total order backlog of approximately US$20 million, with the majority expected to be shipped in the first half of 2026," he wrote. "With 2026 consensus revenue estimates around US$25 million, the current backlog, along with the company’s stable retail business (estimated at US$6 million in 2025), provides visibility to over 100% of consensus revenue before considering any additional program wins. We believe the company is well-positioned to surpass consensus expectations as three high-volume drone programs (PBAS, the US$1 billion Drone Dominance, and SkyFoundry) are set to ramp up in 2026."

Bohlig said the firm believes the company is on track to begin shipping over 10,000 motors per month as early as January.

"We believe the revenue ramp supports a clear path to breakeven at a $10 million quarterly revenue run rate," he said. "We expect UMAC to achieve this in 4Q26 and believe reaching this milestone represents an additional catalyst for the shares."

Bohlig also predicted multiple strategic M&A opportunities, with UMAC potentially acting as either an acquirer or an acquisition target. As an acquirer, UMAC could leverage its public currency to pursue a merger with a scaled private company seeking access to the public markets. Conversely, the company may become an increasingly attractive target for OEMs looking to vertically integrate or defense suppliers aiming to gain exposure to the rapidly growing low-cost drone market, he said.

Under Section 882 of the recently passed FY26 NDAA, the government can provide financial incentives to private U.S. companies to help expand their production, the analyst noted.

"We would not be surprised if UMAC received a direct financial incentive from the DoW in 2026, which could provide a clear robust demand signal and catalyst to shares," he said.

On January 5, UMAC announced in a release that it would participate in the 28th Annual Needham Growth Conference January 13-14 in New York City.

The Catalyst: 'Unleashing American Drone Dominance'

According to a December 2 report by C. Todd Lopez on the War Department's website, the Pentagon has issued a request for information to evaluate the industry's readiness and capability to produce approximately 300,000 drones quickly and cost-effectively. This initiative is part of Secretary of War Pete Hegseth's efforts to meet the "drone dominance" objectives set by the president.

On June 6, President Donald J. Trump signed the "Unleashing American Drone Dominance" executive order, which outlines the United States' plans to enhance its drone capabilities in both commercial and military sectors. This includes delivering large quantities of affordable, American-made, lethal drones to U.S. military units to enhance their combat effectiveness. In July, Hegseth followed up with the "Unleashing U.S. Military Drone Dominance" memorandum, detailing his strategy for how the department would achieve the president's goals.

Part of the secretary's plan involves collaborating with other government sectors to strengthen the emerging U.S. drone manufacturing industry by approving hundreds of American products for department purchase. This effort aims to drive a "technological leapfrog" by equipping combat units with the best low-cost American-made drones and incorporating training that reflects the department's combat expectations. "Next year I expect to see [drone] capability integrated into all relevant combat training, including force-on-force drone wars," the secretary stated.

Grand View Research reported that the global drone market was valued at US$73.06 billion in 2024 and is anticipated to reach US$163.6 billion by 2030, with a compound annual growth rate (CAGR) of 14.3% from 2025 to 2030. This expansion is primarily driven by rapid technological advancements in drones, improvements in battery efficiency, AI-driven autonomous systems, and enhanced imaging sensors, which are broadening the application of drones across various industries, as noted by Grand View. In 2024, North America dominated the drone market, capturing over 39% of the market share. The hardware segment accounted for the largest revenue share by component, exceeding 58% in 2024, and the multi-rotor segment held the largest revenue share by product in 2024, according to researchers.

The financial stakes are significant. According to a December 5 report for Business Insider, author Chris Panella highlighted that "billions of dollars are at stake" in the race to develop defense drones. "The Pentagon is preparing to spend US$9.4 billion on aerial combat drones in fiscal year 2026 as part of its larger US$13.4 billion investment in autonomous systems," the article noted. "Additionally, the Air Force is requesting US$789.4 million for the research and development of autonomous 'loyal wingmen' drones that can operate alongside crewed combat aircraft or conduct missions independently. The Department of Defense also plans to allocate US$3.1 billion to counter-drone technology."

Ownership and Share Structure¹

As for ownership and share structure, seven strategic entities own 6.9% of Unusual Machines, including the CEO, Evans, with 3.03% and Chief Financial Officer Brian Hoff with 1.13%. More than 100 institutions hold 23.36%; one of them, Tudor Investment Corp., is the largest shareholder overall, with 3.27%. Retail investors have the rest.

Unusual Machines has 36.88 million shares outstanding. Its market cap is US$590.01 million. Its 52-week range is US$4.45–17.48 per share.