Red Cat (NASDAQ:RCAT) Shares Gap Up - Here's Why

Key Points

• Red Cat shares initially gapped higher, opening at $5.12 versus a prior close of $4.72, but later traded near $4.70.
• Analyst sentiment is mixed, though the stock carries a consensus “Moderate Buy” rating and a $16.71 price target; ratings range from “Strong Buy” to “Strong Sell.”
• The company missed quarterly earnings and revenue estimates, reporting an EPS loss of $0.26 and $20.2 million in revenue, while insiders sold 225,000 shares worth about $2.0 million over 90 days.

Red Cat Holdings, Inc. (NASDAQ:RCAT - Get Free Report)'s stock price gapped up prior to trading on Monday. The stock had previously closed at $4.72, but opened at $5.12. Red Cat shares last traded at $4.6950, with a volume of 1,485,329 shares.

Wall Street Analyst Weigh In

Several analysts have issued reports on the company. Wall Street Zen cut Red Cat from a "sell" rating to a "strong sell" rating in a research report on Saturday, July 18th. Needham & Company LLC cut their price target on Red Cat from $20.00 to $15.00 and set a "buy" rating on the stock in a report on Friday, August 7th. HC Wainwright reissued a "buy" rating and issued a $20.00 price target on shares of Red Cat in a research report on Friday, August 7th. Zacks Research cut Red Cat from a "hold" rating to a "strong sell" rating in a research note on Monday, October 12th. Finally, Piper Sandler started coverage on Red Cat in a research note on Wednesday, September 2nd. They set a "neutral" rating and a $9.00 price objective for the company. Two research analysts have rated the stock with a Strong Buy rating, five have given a Buy rating, one has assigned a Hold rating and two have issued a Sell rating to the stock. Based on data from MarketBeat, Red Cat currently has a consensus rating of "Moderate Buy" and a consensus price target of $16.71.

Red Cat Stock Up 0.7%

The business has a 50-day moving average price of $7.77 and a 200-day moving average price of $9.62. The firm has a market capitalization of $583.63 million, a price-to-earnings ratio of -5.88 and a beta of 1.51.

Red Cat (NASDAQ:RCAT - Get Free Report) last posted its quarterly earnings data on Thursday, August 6th. The company reported ($0.26) earnings per share for the quarter, missing analysts' consensus estimates of ($0.21) by ($0.05). Red Cat had a negative return on equity of 32.25% and a negative net margin of 136.26%. The business had revenue of $20.20 million during the quarter, compared to analyst estimates of $22.65 million. On average, equities research analysts forecast that Red Cat Holdings, Inc. will post -0.79 earnings per share for the current year.

Insider Buying and Selling at Red Cat

In other news, Director Christopher R. Moe sold 20,000 shares of the company's stock in a transaction dated Tuesday, August 11th. The shares were sold at an average price of $10.51, for a total transaction of $210,200.00. Following the transaction, the director owned 200,502 shares in the company, valued at $2,107,276.02. This represents a 9.07% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is available through this hyperlink. Also, Director Nicholas Reyland Liuzza, Jr. sold 55,000 shares of the company's stock in a transaction dated Tuesday, August 11th. The shares were sold at an average price of $10.63, for a total transaction of $584,650.00. Following the transaction, the director owned 489,874 shares in the company, valued at approximately $5,207,360.62. This trade represents a 10.09% decrease in their position. The SEC filing for this sale provides additional information. Over the last ninety days, insiders sold 225,000 shares of company stock worth $1,955,850. 12.50% of the stock is owned by insiders.

Institutional Trading of Red Cat

Several large investors have recently bought and sold shares of the stock. BlackRock Inc. purchased a new position in Red Cat during the 2nd quarter worth approximately $119,610,000. State Street Corp lifted its stake in Red Cat by 68.8% during the 2nd quarter. State Street Corp now owns 12,091,447 shares of the company's stock valued at $128,774,000 after acquiring an additional 4,928,540 shares during the period. Van ECK Associates Corp purchased a new stake in shares of Red Cat in the 2nd quarter valued at $27,193,000. Renaissance Technologies LLC acquired a new stake in shares of Red Cat in the first quarter worth $18,533,000. Finally, AWM Investment Company Inc. acquired a new position in Red Cat during the second quarter valued at $9,313,000. Hedge funds and other institutional investors own 37.97% of the company's stock.

About Red Cat

Red Cat Holdings, Inc is a drone technology company that develops and supplies unmanned aircraft systems for defense, government, public safety and commercial applications. The company focuses on autonomous and remotely operated aerial systems designed to support intelligence, surveillance and reconnaissance missions, including operations in contested or GPS-denied environments.

Red Cat's product portfolio includes the Teal 2 small unmanned aircraft system, a compact drone designed for close-range reconnaissance and situational awareness.

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