Red Cat (NASDAQ:RCAT) Stock Price Down 5% - Time to Sell?

Key Points

• Red Cat shares fell 5% to $6.59, below their 50-day and 200-day moving averages of $8.49 and $10.77, respectively.
• Analysts remain broadly optimistic, with a consensus “Moderate Buy” rating and an average price target of $16.71, despite targets ranging from $9 to $25.
• The company reported weaker-than-expected quarterly results, including an EPS loss of $0.26 versus the expected $0.21 loss and revenue of $20.2 million versus the $22.65 million estimate; insiders also sold 225,000 shares over the past 90 days.

Shares of Red Cat Holdings, Inc. (NASDAQ:RCAT - Get Free Report) traded down 5% on Wednesday . The stock traded as low as $6.57 and last traded at $6.59. 10,251,074 shares traded hands during trading, a decline of 22% from the average daily volume of 13,081,903 shares. The stock had previously closed at $6.94.

Analyst Upgrades and Downgrades

A number of research firms recently weighed in on RCAT. Evercore assumed coverage on shares of Red Cat in a report on Monday, August 31st. They issued an "outperform" rating and a $15.00 price objective on the stock. Needham & Company LLC lowered their price objective on shares of Red Cat from $20.00 to $15.00 and set a "buy" rating on the stock in a research report on Friday, August 7th. Roth Capital started coverage on shares of Red Cat in a research report on Monday, June 1st. They issued a "buy" rating and a $25.00 price target for the company. Piper Sandler initiated coverage on shares of Red Cat in a research report on Wednesday, September 2nd. They issued a "neutral" rating and a $9.00 target price for the company. Finally, HC Wainwright reiterated a "buy" rating and issued a $20.00 target price on shares of Red Cat in a report on Friday, August 7th. Two research analysts have rated the stock with a Strong Buy rating, five have issued a Buy rating, one has assigned a Hold rating and one has assigned a Sell rating to the company's stock. Based on data from MarketBeat.com, the company has a consensus rating of "Moderate Buy" and an average price target of $16.71.

Red Cat Trading Down 5.3%

The stock has a fifty day moving average of $8.49 and a two-hundred day moving average of $10.77. The stock has a market capitalization of $806.40 million, a price-to-earnings ratio of -8.11 and a beta of 1.35.

Red Cat (NASDAQ:RCAT - Get Free Report) last released its quarterly earnings results on Thursday, August 6th. The company reported ($0.26) EPS for the quarter, missing the consensus estimate of ($0.21) by ($0.05). The company had revenue of $20.20 million for the quarter, compared to the consensus estimate of $22.65 million. Red Cat had a negative net margin of 136.26% and a negative return on equity of 32.25%. Equities analysts expect that Red Cat Holdings, Inc. will post -0.79 earnings per share for the current year.

Insider Activity

In related news, Director Christopher Moe sold 20,000 shares of the stock in a transaction that occurred on Tuesday, August 11th. The shares were sold at an average price of $10.51, for a total value of $210,200.00. Following the sale, the director directly owned 200,502 shares in the company, valued at $2,107,276.02. This trade represents a 9.07% decrease in their position. The sale was disclosed in a legal filing with the SEC, which is available at this link. Also, Director Nicholas Liuzza, Jr. sold 55,000 shares of Red Cat stock in a transaction dated Tuesday, August 11th. The stock was sold at an average price of $10.63, for a total value of $584,650.00. Following the transaction, the director owned 489,874 shares in the company, valued at approximately $5,207,360.62. This represents a 10.09% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold a total of 225,000 shares of company stock valued at $1,955,850 in the last ninety days. 12.50% of the stock is owned by insiders.

Institutional Investors Weigh In On Red Cat

Hedge funds and other institutional investors have recently added to or reduced their stakes in the business. State Street Corp grew its position in shares of Red Cat by 68.8% in 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. The Manufacturers Life Insurance Company raised its position in shares of Red Cat by 4.2% in the second quarter. The Manufacturers Life Insurance Company now owns 49,008 shares of the company's stock valued at $522,000 after purchasing an additional 1,961 shares during the period. WINTON GROUP Ltd raised its position in shares of Red Cat by 289.5% in the second quarter. WINTON GROUP Ltd now owns 107,890 shares of the company's stock valued at $1,149,000 after purchasing an additional 80,190 shares during the period. Integrated Wealth Concepts LLC acquired a new stake in shares of Red Cat during the 2nd quarter worth about $42,000. Finally, Arizona State Retirement System boosted its holdings in shares of Red Cat by 23.4% during the 2nd quarter. Arizona State Retirement System now owns 36,426 shares of the company's stock worth $388,000 after buying an additional 6,917 shares during the period. 37.97% of the stock is currently owned by institutional investors and hedge funds.

Red Cat Company Profile

Red Cat Holdings, Inc is a drone technology company that develops and supplies small unmanned aircraft systems for military, government, public safety and commercial applications. Its solutions are designed to support intelligence, surveillance and reconnaissance, situational awareness, and other missions requiring portable and rapidly deployable aerial systems.

Through its Teal Drones business, Red Cat offers the Teal 2 and related Black Widow systems, compact drones designed for defense and public-safety users.

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