Droneshield’s Back on Investors Radar, But Who’s Really Flying It?

Droneshield Takes Off Again

Droneshield (ASX: DRO) shares jumped 16.2% to close at A$2.26, marking a strong rebound after a period of controversy that had weighed on sentiment. The move has sparked plenty of discussion among investors. Is this the start of institutional money rotating back in, or are traders simply taking advantage of short-term momentum to capture quick profits? It is also possible that retail investors are stepping back in, seeing value where others have pulled back. Whatever the driver, the rally may reflect a short-term mismatch between market expectations and the company’s underlying fundamentals, something worth watching closely as the story continues to unfold.

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DroneShield’s Retail Army Strikes Back

Many of the 35,000 retail investors in DroneShield are well aware of the controversy surrounding insider selling within the company. Yet, the evidence points toward strong retail participation driving the latest rebound, particularly as the storm that dominated headlines in recent weeks begins to fade. It appears that retail investors now view these levels as a potential buying opportunity, especially given analysts’ consensus price target of around A$5.

If DroneShield can maintain its fundamentals and continue its growth trajectory, the stock could prove to be a multi-bagger. However, that outcome depends heavily on whether its US and European divisions can keep securing recurring and meaningful contract wins. In our earlier coverage, we noted that despite DroneShield’s stellar rally, a pullback was inevitable given how richly it was priced. After a correction of more than 60%, our view was that levels below A$2 presented an attractive re-entry point for investors willing to look past the short-term noise and focus on long-term execution.

DroneShield’s fundamentals remain strong, supported by the rollout of its new SaaS platform for counter-drone technology. This software-based model is likely to become a growing part of total revenue, improving overall margins and pushing the company closer to sustainable profitability. What makes DroneShield’s story even more compelling is that its market extends beyond the defence sector. The company is increasingly pursuing commercial opportunities, including partnerships with airports and critical infrastructure operators, positioning itself to benefit from rising global demand for airspace security solutions.

From Fallout to Flight Path

From a valuation perspective, DroneShield’s current price-to-sales multiple of roughly 14.8x may appear elevated. However, when measured against forecast revenue of about A$375 million by FY27, that multiple compresses to around 4.9x, a more reasonable entry point for long-term growth investors comfortable with higher risk. The company also holds approximately A$200 million in cash, providing ample capacity to invest in product development, international expansion, and new contracts.

The key question is whether management can deploy that capital efficiently. So far, execution has been solid, reflected in the company’s ability to scale while maintaining a healthy balance sheet. That said, investors should remain cautious. DroneShield’s rapid growth has exposed gaps in internal systems and communication, and addressing these growing pains will be critical to sustaining momentum and building long-term shareholder value.