Ondas shares slide as short interest tops 40%

Ondas Holdings Inc. shares traded at $7.61 after short interest rose above 40%, a figure that has coincided with the stock’s fall from last year’s peak near $15.30. The share price has declined by more than 50% from that high.

The company’s outstanding share count increased to about 529 million from roughly 40 million in 2022, a change that has raised investor concerns about dilution. Short sellers now account for roughly 40% of the company’s available float.

In the most recent quarter, revenue increased 13% year over year to $83 million and the company reported a backlog of $757 million. Management reiterated full-year revenue guidance between $525 million and $550 million and reported a deal pipeline of about $11 billion for the next two years. The Core + Growth program secured $175 million in new orders during the period.

Analysts’ projections show a marked rise in revenue for upcoming periods. The average estimate for the next quarter is about $148 million, consensus revenue for the current year is roughly $536 million, and forecast revenue for next year is about $1.01 billion. Several analysts have raised price targets recently, including Oppenheimer’s Timothy Horan to $18, Needham’s Austin Bohlig to $19, and Northland Securities’ Michael Latimore to $18. Other firms such as HC Wainwright, Stifel and Loop Capital maintain coverage.

Management has expanded the company through acquisitions, including DZYNE Technologies and Cyberhawk, which it says add technology and customer solutions to its portfolio.

Ondas is reporting losses while expanding operations and completing acquisitions. The company may need to access capital markets to support growth and integration of acquired businesses.

Shares of other companies in the drone sector have also declined. AeroVironment is down more than 65% from its high and Kratos Defense & Security has fallen about 64% from its peak.

Technical indicators show the stock slid from about $14.10 in June to the current level and has moved below the 50-day exponential moving average and the 50% Fibonacci retracement level. The price fell below a recent resistance point near $9.97; technical analysts identify a potential next support level around $6.22.

Investors will be watching upcoming quarterly results, the company’s execution on integrating acquisitions, order flow against the large pipeline, and any capital markets activity that could affect share count and dilution.