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Red Cat Holdings
(NASDAQ:RCAT)
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Rating:49Neutral
Price Target:
$4.50
▼(-50.55% Downside)
Action:Reiterated
Date:10/23/26
The score is held down primarily by weak financial performance (large losses and substantial cash burn) and a poor technical setup (price below all major moving averages with negative momentum). Offsetting factors include a more constructive earnings-call outlook with reiterated FY2026 guidance, improving gross margin trajectory and strong liquidity, plus a strategically positive (but still conditional) acquisition update; valuation is difficult to assess due to negative earnings and no dividend.
Positive Factors
Rapid revenue growth
The sharp increase in revenue indicates accelerating adoption across Red Cat’s drone and defense programs. If management converts its growing pipeline into deliveries, this expanded base can improve operating leverage, support larger customer relationships, and provide a foundation for sustained growth over the coming quarters.
Negative Factors
Substantial cash burn
Heavy operating and free-cash-flow losses show that current growth is consuming significant cash rather than self-funding. If burn remains elevated while profitability is delayed, liquidity will be drawn down faster and management may face more constrained choices for investment, acquisitions, or expansion.
Read all positive and negative factors
Positive Factors
Negative Factors
Rapid revenue growth
The sharp increase in revenue indicates accelerating adoption across Red Cat’s drone and defense programs. If management converts its growing pipeline into deliveries, this expanded base can improve operating leverage, support larger customer relationships, and provide a foundation for sustained growth over the coming quarters.
Read all positive factors
Red Cat Holdings (RCAT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$676.52M
Dividend YieldN/A
Average Volume (3M)8.17M
Price to Earnings (P/E)―
Beta (1Y)1.69
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees244
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)-0.74
Shares Outstanding152,714,360
10 Day Avg. Volume6,762,751
30 Day Avg. Volume8,168,785
Financial Highlights & Ratios
PEG Ratio0.45
Price to Book (P/B)3.85
Price to Sales (P/S)23.26
P/FCF Ratio-9.89
Enterprise Value/Market Cap1.70
Enterprise Value/Revenue28.17
Enterprise Value/Gross Profit899.64
Enterprise Value/Ebitda-17.83
Forecast
1Y Price Target
$16.14Price Target Upside77.39% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
EPS Forecast (FY)-0.82
Revenue Forecast (FY)$146.60M
Red Cat Holdings Business Overview & Revenue Model
Company Description
Red Cat Holdings, Inc. (RCAT) operates as a multifaceted provider within the drone industry, offering a comprehensive suite of products, services, and innovative solutions. The company develops and supplies unmanned aerial vehicle (UAV) technology...
Red Cat Holdings Earnings Call Summary
Earnings Call Date:Aug 06, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 12, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational and financial momentum: large year-over-year revenue growth, improving gross margins, substantial cash and working capital, expanded manufacturing capacity, product launches and international wins. At the same time, near-term challenges include elevated operating expenses and R&D spending, a large inventory build that ties capital, continued dependence on timely government contract awards, and integration/execution risk from acquisitions and rapid scaling. Management expressed confidence in a second-half ramp and profitability targets, but achievement depends on conversion of pipeline and delivery timing.Positive Updates
Record Quarterly and Year-over-Year Revenue Growth
Q2 2026 revenue of $20.2M (record quarter) — up 520% year-over-year from $3.2M and up ~30% sequentially from Q1 ($15M). First half 2026 revenue totaled $35.7M versus $4.8M in H1 2025 (management cited ~636% YoY growth).
Negative Updates
High Operating Expenses and R&D Spend
Total operating expenses of approximately $41.9M in the quarter with R&D of ~$14.2M; management acknowledged OpEx stepped up ~43% sequentially (to ~$42M) as they invest in personnel, manufacturing, product development and acquisitions.
Read all updates
Q2-2026 Updates
Positive
Negative
Record Quarterly and Year-over-Year Revenue Growth
Q2 2026 revenue of $20.2M (record quarter) — up 520% year-over-year from $3.2M and up ~30% sequentially from Q1 ($15M). First half 2026 revenue totaled $35.7M versus $4.8M in H1 2025 (management cited ~636% YoY growth).
Read all positive updates
Company Guidance
Management reiterated FY2026 guidance of $150–$180 million in revenue, forecasting the bulk of that to fall in H2 (implying roughly $114M+ of second-half revenue) with a sequential ramp from Q3 into Q4; Q2 results were $20.2M (up 520% YoY from $3.2M and ~30% sequentially from Q1’s ~$15M), H1 revenue was $35.7M (≈$36M, ~636% Y/Y growth) with H1 gross profit ~$5.2M and Q2 gross profit $3.3M (16.1% margin) and management expects gross margins to reach ~30% toward year‑end; they also flagged divisional profitability targets (Blue Ops and Teal expected to be profitable by Q4 with <10 USVs needed for Blue Ops), potential near‑term contract upside (e.g., $14–28M from Drone Dominance in Q3), $50–80M of sellable drones ready to ship, cash of $325.6M (vs $167.9M YE2025), working capital ~$396.5M, inventory ~$84.8M (up from $30.4M), ~$12.6M of YTD capex, Q2 OpEx ≈$41.9M and R&D ≈$14.2M, and a manufacturing footprint of ~260–270k sq ft—all underpinning a path to company‑level profitability into 2027.Red Cat Holdings Financial Statement Overview
Summary
Income Statement
18
Very Negative
Balance Sheet
62
Positive
Cash Flow
14
Very Negative
| Breakdown | TTM | Dec 2025 | Dec 2025 | Jul 2024 | Apr 2023 | Apr 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 40.73M | 40.73M | 7.28M | 17.84M | 4.62M | 6.43M |
| Gross Profit | 1.28M | 1.27M | -2.03M | 3.68M | -834.31K | 925.51K |
| EBITDA | -64.33M | -69.37M | -36.50M | -16.04M | -22.54M | -11.28M |
| Net Income | -72.07M | -72.08M | -65.42M | -24.05M | -28.11M | -11.69M |
Balance Sheet | ||||||
| Total Assets | 277.61M | 273.68M | 55.60M | 48.54M | 60.74M | 85.08M |
| Cash, Cash Equivalents and Short-Term Investments | 167.87M | 167.87M | 9.15M | 6.07M | 15.99M | 48.88M |
| Total Debt | 18.43M | 18.43M | 1.97M | 2.27M | 2.97M | 3.72M |
| Total Liabilities | 31.77M | 27.84M | 5.49M | 4.97M | 5.98M | 7.16M |
| Stockholders Equity | 245.83M | 245.83M | 50.12M | 43.56M | 54.77M | 77.92M |
Cash Flow | ||||||
| Free Cash Flow | -95.78M | -95.78M | -20.70M | -18.82M | -32.23M | -16.38M |
| Operating Cash Flow | -89.13M | -89.13M | -20.54M | -18.56M | -29.78M | -16.02M |
| Investing Cash Flow | -6.65M | -6.65M | 4.24M | 13.57M | 29.59M | -46.60M |
| Financing Cash Flow | 254.49M | 254.49M | 19.39M | 7.80M | -633.55K | 66.43M |
Red Cat Holdings Technical Analysis
Negative
9.10
Price Trends
7.23
Negative
8.45
Negative
10.69
Negative
Market Momentum
-0.79
Positive
21.30
Positive
13.87
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCAT, the sentiment is Negative. The current price of 9.1 is above the 20-day moving average (MA) of 5.51, above the 50-day MA of 7.23, and below the 200-day MA of 10.69, indicating a bearish trend. The MACD of -0.79 indicates Positive momentum. The RSI at 21.30 is Positive, neither overbought nor oversold. The STOCH value of 13.87 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RCAT.
Red Cat Holdings Risk Analysis
Red Cat Holdings disclosed 52 risk factors in its most recent earnings report. Red Cat Holdings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Red Cat Holdings Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
56 Neutral | $149.89M | -5.69 | -3.48% | ― | ― | ― | |
54 Neutral | $6.26B | -21.18 | -6.64% | ― | 84.44% | -541.91% | |
54 Neutral | $7.26B | 225.01 | 1.14% | ― | 25.50% | 86.96% | |
49 Neutral | $676.52M | -5.15 | -35.02% | ― | ― | ― | |
43 Neutral | $40.53M | -0.98 | -299.81% | ― | 28.74% | -79419.35% | |
42 Neutral | $14.22M | -4.23 | -146.36% | ― | 52.59% | -104.72% |
* Industrials Sector Average
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Red Cat Holdings Corporate Events
Business Operations and StrategyDelistings and Listing ChangesM&A Transactions
Red Cat Advances Steyr Motors Acquisition to Expand Defense Portfolio
Positive
Oct 23, 2026
On October 21, 2026, Red Cat entered a Business Combination Agreement with its Austrian subsidiary SMOT Acquisition GmbH and Steyr Motors AG, following a voluntary public cash tender offer at EUR 39 per share for all 5,251,261 Steyr Motors shares....
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.