Kerrisdale Capital says it is short shares of Red Cat (RCAT) Holdings, a $1B drone manufacturer that has added more than $900M in market capitalization over the last months in anticipation of an award for the production of the U.S. Army’s short range reconnaissance drone. In a research note, Kerrisdale says expectations for both the SRR contract side and the potential for follow-on sales “bear almost no relationship to reality” and that Red Cat’s depiction of a huge follow-on market consisting of the other U.S. military services, U.S. government agencies, and U.S.-allied militaries is “also a fantasy.” The firm thinks the company’s 2025 guidance will not materialize.
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