ONDS, AVAV, RCAT, RDW Rise Premarket: Investors Pour $10.7B Into Drone Stocks – S3 Sees 'More Fireworks' Ahead

Short exposure jumped about $2 billion, or 26.7%, as drone firms became Wall Street battleground stocks.

• Drone stocks rose as the U.S.-Iran war highlighted growing demand for unmanned weapons and counter-drone systems.
• Investors added $10.7 billion in new long exposure to six drone-related stocks between Jan.16 and July 15.
• The Pentagon is targeting 300,000 low-cost attack drones by the end of 2027 under its $1.1 billion Drone Dominance program.

Drone stocks are turning into Wall Street battlegrounds as as traders bet the U.S.-Iran conflict will accelerate demand for unmanned defense systems. Investors have piled in nearly $10.7 billion into new long bets.

Shares of Ondas Holdings, Inc. (ONDS), AeroVironment, Inc. (AVAV), Red Cat Holdings, Inc. (RCAT) and Redwire Corp. (RDW) all rose 1% in premarket trading on Monday as the latest U.S. strikes on Iran underscored the growing role of attack drones, interceptors and counter-UAS systems. 

Why Wall Street Is Piling Into Drone Stocks 

Between Jan.16 and July 15, passive long holdings across six drone-related stocks increased by about $9 billion, or 7.2%, while active long holdings rose another $1.7 billion, or 5%, according to S3 Partners. The $10.7 billion increase came even as the group’s stocks fell about 25% over the same six-month period. The analysis covered AeroVironment, Ondas, Red Cat, Redwire, Boeing (BA) and Teledyne Technologies, Inc. (TDY). Boeing, Ondas and Red Cat led the increase in passive long positioning, while Boeing and AeroVironment posted the largest gains among active investors.

Short Sellers Are Betting The Drone Rally Has Gone Too Far 

Meanwhile, bearish bets climbed even faster. Active short exposure increased by about $2 billion, or 26.7%, between Jan. 16 and July 15, led by Ondas, AeroVironment and Teledyne. “Most of these stocks are battleground stocks except for the larger cap BA and TDY,” S3 said. The firm said that long investors are positioning for contract wins, technological advances and higher defense spending, while short sellers are targeting “overbought situations looking for pullbacks.” S3 added: “Expect more fireworks in the drone sector.”

U.S.-Iran Conflict Puts Drone Warfare In Focus 

The development comes as the U.S. completed a ninth consecutive night of strikes on Iran, targeting command centers, air defenses, coastal surveillance sites, maritime capabilities, communications networks and missile and drone launch sites.

The strikes, which followed renewed Iranian missile and drone attacks across the region, were aimed at degrading Tehran’s ability to threaten commercial shipping through the Strait of Hormuz. Iran retaliated with missile and drone attacks on U.S. assets and regional allies, including targets in Jordan and Kuwait, while sirens sounded in Bahrain.  The conflict began on Feb.28 and has since expanded beyond strictly military targets to include bridges, utilities, ports and other infrastructure. 

Pentagon Targets 300,000 Drones By 2027

The escalation comes as the Trump administration reportedly explores funding arrangements with private drone companies to expand domestic production and lower costs. The push aligns with the Pentagon’s $1.1 billion Drone Dominance program, which aims to build an arsenal of roughly 300,000 low-cost attack drones by the end of 2027, with a target price near $5,000 per drone.

A 2025 estimate put annual U.S. drone-production capacity at about 100,000 units, compared with roughly four million produced by Ukraine in the prior year. The Defense Department has also requested more than $54 billion for its Defense Autonomous Warfare Group, up from $225 million, while a potential $1 trillion U.S. defense appropriation could funnel more funding toward attack drones, interceptor drones and counter-UAS development.

How Do Retail Traders Feel About Drone Stocks?

On Stocktwits, retail sentiment was ‘bearish’ for AVAV and RDW amid ‘low’ message volume. ONDS drew ‘neutral’ sentiment amid ‘normal’ message volume, while RCAT saw ‘bullish’ sentiment amid ‘high’ message volume. 

Over the past year, ONDS has surged 172%, while RCAT, AVAV and RDW have fallen 37%, 49% and 56%, respectively. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.<