Red Cat’s Drone Drama: A Cash Grab?

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So, Red Cat Holdings (RCAT 12.47%) took a bit of a tumble today – 11.2% by lunchtime, if you’re keeping score. And honestly? I’m not even sure why. Which, in the grand scheme of things, is almost more unsettling than actual bad news. It’s like the market just… decided it didn’t like the look of them. Don’t ask me. I just report the chaos.

But there was news. For Kratos Defense & Security (KTOS 8.53), anyway. And, as these things tend to do, it casts a rather long shadow.

Kratos Needs a Life Raft

Kratos announced they’re expanding their stock offering this morning. Basically, they’re printing money. Up to $1.4 billion worth. It’s the financial equivalent of screaming into the void, really. But a very lucrative void. And, naturally, this has implications for our little Red Cat.

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What Does This Mean for Red Cat? (Besides Panic?)

First off, Kratos is about to be swimming in cash. Which, let’s be real, is never a good look for the competition. They can outspend, out-research, and generally just make life very difficult for anyone else in the military drone game. Red Cat, bless its heart, might find itself a bit…outgunned. It’s like bringing a water pistol to a tank battle, isn’t it?

But here’s where it gets interesting. Because Red Cat might just be tempted to do the exact same thing. And honestly? I wouldn’t blame them. Not even a little.

See, Red Cat is burning through cash at a frankly alarming rate – $70 million a year. Seventy. Million. Dollars. It’s a talent, really. And like Kratos, their stock has been on a bit of a rollercoaster ride lately. Up over double in the last 52 weeks. Investors have been throwing money at drone stocks like they’re going out of style. Which, let’s face it, they probably will.

So, with a valuation that’s currently orbiting the stratosphere – 49 times trailing sales, people! – Red Cat’s management might be thinking, “Hey, let’s cash in while we can.” Sell some shares, raise some funds, and… dilute the shareholders a bit. It’s a classic move. A slightly ruthless move, but a classic nonetheless. And Kratos stock took a 7% hit when they announced their offering. Just saying.

It’s a risky game, this whole stock market thing. A beautifully chaotic, occasionally terrifying game. And Red Cat? Well, they’re playing it with a full house and a slightly reckless grin. I’m not sure if that’s a good thing or a terrible thing. But it certainly makes for good watching.

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2026-02-27 21:23