Kratos: A Drone’s Ascent and a Stock’s Fall

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Now, I reckon there’s a peculiar spectacle unfolding on the markets these days, and it concerns a company named Kratos Defense & Security. Its stock, you see, has been taking a tumble – a proper, four-day plummet, mind you – and all without a whisper of bad news. Folks are scratching their heads, looking for a reason. Well, I’ll tell you what I suspect: it’s simply that Kratos stock got itself plumb overvalued. Yes sir, too much of a good thing, as the saying goes.

What Kratos Does, You Ask?

Kratos, you see, is in the business of drones – those mechanical birds of war, if you will. And not just any drones, mind you, but the kind that the military is throwing money at faster than a gambler loses his shirt. They build the things you use for target practice, which is a fine business, I suppose, if you don’t think too hard about it. But their real pride and joy is the XQ-58 Valkyrie – a “loyal wingman” drone, they call it. Sounds like something out of a dime novel, don’t it? The Air Force and Marines are kicking the tires on it, and Kratos is partnered up with Northrop Grumman to make it even more… ambitious.

They don’t stop at just flying contraptions, neither. They dabble in ground systems for satellites, propulsion for those drones, missiles, and even those newfangled loitering munitions. And they’re poking around with rockets and hypersonic vehicles, chasing after the next great leap forward. A fella could spend a lifetime just trying to understand all that’s going on in their workshops.

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How Much is a Drone Worth, Anyway?

Space, hypersonics, and drones… well, it’s a right proper collection of future-facing technologies. Kratos certainly knows where to be when the Pentagon’s pockets are open. The trouble is, everybody else seems to know it too. And that knowledge, like a fever, has driven the price of their stock to levels that would make a balloon artist blush.

Currently, you’re looking at a price nearly 800 times what they’ve earned in the past year. Eight hundred times! Why, a fella could buy a small country for that kind of multiple. And the next 12 months don’t look much better, with a multiple of over 200. Worse yet, these earnings aren’t exactly solid as a rock. They’re not backed by positive cash flow, meaning Kratos is still burning through money like a steamboat through coal.

Now, I’m not saying Kratos isn’t a good company. They’re building impressive things, no doubt. But at this price, it’s a sell, plain and simple. A fella could find a better return on investment by betting on a mule race. Mark my words, this is a bubble waiting to burst, and those who jump in late are likely to get a soaking.

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2026-02-02 20:52