Thompson Jeffrey M sold $1.6M of RCAT

The U.S. defense budget proposal allocates $1.5 trillion, with $74 billion for drones, sparking a rally in drone-related stocks. Companies like ONDS, RCAT, AVAV, KTOS, and DPRO saw overnight gains of 2-3%. ONDS's subsidiary secured a $20 million border security order, while RCAT and KTOS won recent defense contracts.

President Trump imposed new tariffs on foreign drone imports, benefiting U.S. manufacturers AeroVironment (AVAV), Kratos (KTOS), and Red Cat (RCAT). Tariffs range from 25% to 100%, with some delayed until 2027. The policy aims to reduce U.S. dependence on foreign drone supply chains and incentivize domestic manufacturing. Institutional positioning varies, with AeroVironment seeing declines, while Kratos and Red Cat gain investor interest.

Red Cat (RCAT) reported Q2 revenue of $20.2M, up 520% YoY, with gross margin at 16.1%. The company expects significant Pentagon contracts, including $14M-$28M for its ISR drone and a $100M bid for SWAP. CEO Jeff Thompson highlighted technological advances and progress in overseas markets, with Japan as the second-largest customer. RCAT anticipates stronger H2 results and full-year revenue of $150M-$180M.

Red Cat Holdings said, in a DroneXL interview, it completed the full $2.49 million U.S. Air Force order for Black Widow drones ahead of an Aug. 24 delivery deadline. The U.S. Army visited its facility to assess a three-camera AiN payload using Palantir software, potentially supporting a second program of record. Red Cat also discussed NDAA compliance and Hellcat exports to Japan.

Trump administration signed a proclamation imposing tariffs on imported unmanned aircraft systems and components, including 100% on drones over 25kg or with sensitive national security capabilities, 25% on smaller drones, and additional rates for allied countries. White House says foreign supply chains pose security and safety risks. Premarket shares rose for KTOS, AVAV, ONDS, and RCAT.

After the White House announced new tariffs on imported unmanned aircraft systems and components, drone makers and suppliers’ shares rose on Friday. Reported moves include Unusual Machines up as much as 28%, Red Cat Holdings up 15%, AeroVironment up about 10%, and Kratos up 6.9%. Tariffs take effect in 21 days, with some component duties delayed 180 days, according to the White House.