Why Red Cat Stock Popped Today -- Then Dropped

Red Cat Holdings (RCAT +1.95%) stock got a bump from ringing the bell at the opening of Nasdaq trading this morning.

Shares of the company, which makes drones for the military, climbed nearly 8% in early trading before giving back most of those gains. As of 10:45 a.m. ET, Red Cat stock is up only 2.1%.

Image source: Getty Images.

Red Cat’s other “news”

Red Cat took advantage of its moment in the spotlight to remind investors it will be holding its “inaugural Innovation Day” on Friday, Feb. 27. Details on the Day aren’t plentiful, but Red Cat is expected to provide “an exclusive look at a live drone and USV demonstration,” toot its own horn regarding “just how far we’ve come,” and also describe “opportunities ahead.”

Investors were presumably excited at first by the latter prospect. The quick reversal of this morning’s gains, however, suggests it took them a moment to realize Red Cat hasn’t really told them much about these “opportunities” yet.

Expand

NASDAQ: RCAT

Red Cat

Today’s Change

(1.95%) $0.25

Current Price

$13.08

Key Data Points

Market Cap

$1.5B

Day’s Range

$12.53 - $13.83

52wk Range

$4.58 - $18.02

Volume

195K

Avg Vol

10M

Is Red Cat stock a buy?

That’s not to say we know _nothing _about the opportunities. A video accompanying Red Cat’s announcement of the Day touts a new, missile-armed, drone-deploying uncrewed surface vehicle (USV) that Red Cat is developing to complement its aerial drone offerings, including a Black Widow quadcopter and an Edge 130 vertical take-off and landing drone. There’s no word on what this means for Red Cat’s finances, however, and the company is still expected to be losing money years from now.

Combined with the recent win by a Red Cat subsidiary (Teal Drones) of a contract under the Pentagon’s Drone Dominance Program, Red Cat seems on track to keep growing sales. Whether it can turn those sales into profits remains the real question.