Disclosures: 1,200 share position with $8.80 entry
Fundamentals
Many in this sub complain about finding out about companies just as they've popped or already become overvalued. A lot of you have likely missed the CAPR rise today, but I believe ONDS is next in line.
Ondas is an autonomous defense systems company: their core products right now are Counter-UAS (unmanned aerial systems) defense, and they actively contribute their tech to the Iron Dome + SentryCS CoRF, a counter-drone detection system, + Optimus, a fully autonomous drone platform. They also dabble in intelligence acquisition and surveillance platforms, reflected by their recent acquisition of DZYNE (an autonomous defense platform) and of Cyberhawk, a drone asset management company.
Anyone who has been paying attention has seen that warfare has changed drastically in the last couple decades. The situations in Ukraine and Iran have shown that whoever has the most refined, integrated, and rapidly available drone systems will likely have the greatest control of the military theatre. Trump's constant flip-flopping recently fundamentally comes down to the fact that Iran can build rapidly disposable drone systems capable of attacking the American fleet just by the sheer number and efficiency by which they can be replaced; the global superpower right now is quite literally scrambling in the face of a far more feeble nation that got its act together on drones years ago. Any serious nation looking to put up a fight must have an excellent drone industrial complex.
This reality is the basis of my bull thesis: warfare is becoming increasingly reliant on drones, and companies like Ondas are rising to the occasion.
The 6 Horsemen of My Bull Thesis
1. Short interest is high and climbing: Roughly 44% of float was short as of the most recent snapshot (Aug 13), up from under 35% in July. Rising short interest into a growth story means more and more capital is betting against a company whose own numbers keep beating expectations.
2. The fundamental bear thesis keeps failing to materialise\\:\\ My understanding of the classic reasons to short a small-cap growth name is (a) it'll run out of cash, (b) revenue growth will disappoint, or (c) the story is vaporware. None of those are true for ONDS:
- Cash position is over $1 billion, so bankruptcy/emergency-dilution risk is effectively off the table
- Revenue beat consensus for multiple consecutive quarters, with Q2 up 67% sequentially and full-year guidance raised to $525-550 million
- Real, durable demand tailwind: drone/counter-drone defense spending is a structural, multi-year theme, not a fad
3. A sector-wide catalyst could hit any day\:\ Defense/drone names move as a group on headline risk: new conflict escalation, a fresh government contract award, a competitor's positive data point, or new federal funding news for drone makers. It really does sit among the likes of Palantir and Anduril. Recent conflicts have already been cited by management as validating sustained demand, and any fresh geopolitical headline could reprice the whole group upward fast, forcing shorts to react simultaneously rather than at their own pace. Donald has already maxed out the U.S.'s long-range missile capability and is clearly unwilling to risk lives using short-range or "boots on the ground" options (not humanizing "the Don" here; I genuinely don't think this guy values any life other than his own; however, we've all seen his ego can't take the defeat of a drawn-out boots-on-the-ground conflict with hundreds of potential casualties).
4. Strong balance sheet removes a key "reason to stay short"**: Shorts often hold a position specifically because they're betting on a capital crunch forcing dilutive raises at distressed prices. With over $1B in cash, that pressure valve is gone. This means some shorts who entered on a liquidity thesis no longer have a live reason to hold the trade, and could unw