According to Fox News, the U.S. is scaling back several policies that the Trump administration views as overly restrictive.

U.S. drone makers’ stocks soared in extended trading on Thursday after U.S. Defense Secretary Pete Hegseth asked the Pentagon to boost drone production and loosen rules for their deployment.

Red Cat Holdings (RCAT) surged 16.4%, Unusual Machines (UMAC) rose 13.4% while AeroVironment (AVAV) gained 4.3%. The latest directive for Hegseth follows several executive orders from President Donald Trump, aimed at unleashing “American drone dominance.”

According to Fox News, which obtained a pair of memos sent to the Pentagon, Hegseth said, "the Department’s bureaucratic gloves are coming off," before adding, "Lethality will not be hindered by self-imposed restrictions... Our major risk is risk-avoidance."

As per the news outlet, the U.S. is scaling back several policies that the Trump administration views as restrictive. Now, commanders with the rank of colonel or captain can independently procure and test drones, including 3D-printed prototypes and commercial-off-the-shelf systems, provided they meet national security requirements.

Hegseth has also allowed senior officials to operate and train with drones immediately, without the traditional approval process. Commanders will also be authorized to test non-lethal autonomous unmanned aerial systems in controlled environments.

"Small UAS are such critical force enablers that they must be prioritized at the same level as major weapons systems," Hegseth reportedly said in the memo.

Hegseth also asked military commanders to work with the Federal Aviation Administration to "remove inappropriate range restrictions, fast-track and expand spectrum approval, and establish a variety of UAS training areas that include live fire, combined arms, and swarm testing."

Retail sentiment on Stocktwits about Red Cat and Unusual Machines was in the ‘bullish’ territory, while on Aerovironment, traders were still ‘neutral.’

The importance of drones in modern combat has been evident in Ukraine, where both Moscow and Kyiv have deployed drones in large numbers to target larger enemy hardware. During the recent conflict between Iran and Israel, drones were again used by the two countries heavily to strike critical facilities.

Hegeseth also posted a video about the development on X, tagging the Department of Government Efficiency (DOGE), with whom the Pentagon has forged a close relationship.

Tesla CEO Elon Musk, who recently sparred with Trump multiple times online following his exit from DOGE, praised the directive on X. “Long way to go, but good move,” he wrote.

Red Cat and Unusual Machines stocks have fallen 47% and 48%, respectively, this year.

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