Drone Stocks Red Cat, Kratos, Ondas Surge as Trump Administration Explores Pentagon Funding

TLDR

• The Trump administration is in talks to fund U.S. drone companies through loans and possible equity stakes
• Pentagon’s Drone Dominance program targets 300,000 low-cost attack drones by end of 2027
• Unusual Machines, Performance Drone Works, and Neros Technologies are named as potential funding candidates
• Drone stocks surged across the board, with Unusual Machines up 33% and Red Cat Holdings up 13%
• Ondas Holdings completed a $196.6 million acquisition of defense software firm Omnisys, expanding beyond hardware

The Trump administration is in active talks to provide direct financial support to U.S. drone companies, according to a Wall Street Journal report. The news sent shares of several drone-related stocks sharply higher in premarket trading on Thursday.

The potential deals could include a mix of debt and equity stakes, which would give the U.S. government an ownership share in some companies. Talks are still ongoing and no final terms have been set.

Pentagon’s Drone Dominance Push

At the center of this effort is the Pentagon’s Drone Dominance program, a $1.1 billion initiative aimed at building a stockpile of roughly 300,000 low-cost attack drones by the end of 2027.

The U.S. currently has the capacity to build around 100,000 drones per year. By comparison, Ukraine produced about four million drones last year.

Many U.S.-made drones cost tens of thousands of dollars more than the Pentagon’s target price of around $5,000 each. The funding deals are intended to help companies scale production and bring costs down.

The companies identified as potential funding candidates include Performance Drone Works, which holds an Army reconnaissance drone contract, Neros Technologies, a Sequoia Capital-backed startup, and Unusual Machines, a drone parts supplier.

Unusual Machines has ties to Donald Trump Jr., who serves as a shareholder and advisory board member. The company also announced that its partner Powerus was selected for Phase II of the $1 billion Drone Dominance Program with its MatrixFold drone platform.

Unusual Machines, Inc., UMAC

The Pentagon has requested more than $54 billion for its drone division, the Defense Autonomous Warfare Group, up from around $225 million this year.

Stocks React Sharply

Unusual Machines surged 33% on the news. Red Cat Holdings gained 13%, Kratos Defense rose 8.4%, AeroVironment climbed 8%, AgEagle Aerial Systems added 11.7%, ZenaTech rose 10.5%, and Ondas Holdings gained over 9%.

Red Cat builds small battlefield surveillance drones and has been scaling production of its Black Widow drone while adding AI features. The stock is up over 34% year-to-date.

Kratos makes larger autonomous combat aircraft, including the XQ-58A Valkyrie. It reported 22% revenue growth in its first quarter but its stock is down 24% year-to-date.

Ondas Expands Into Military Software

Ondas Holdings recently completed its $196.6 million all-stock acquisition of Omnisys Ltd., a defense software company. The move shifts Ondas beyond drone hardware into military software systems.

Before Trump’s second term, Pentagon drone purchases made up less than 2% of all U.S. commercial and government drone sales annually.

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