Red Cat (NASDAQ:RCAT) Shares Down 8.7% – Should You Sell?

Shares of Red Cat Holdings, Inc. (NASDAQ:RCAT) were down 8.7% during trading on Wednesday. The stock traded as low as $4.72 and last traded at $4.73. Approximately 8,267,131 shares were traded during trading, a decline of 34% from the average daily volume of 12,582,865 shares. The stock had previously closed at $5.18.

Wall Street Analysts Forecast Growth

A number of research analysts recently commented on the company. Zacks Research cut Red Cat from a “hold” rating to a “strong sell” rating in a report on Monday. Evercore assumed coverage on Red Cat in a research note on Monday, August 31st. They set an “outperform” rating and a $15.00 target price for the company. Needham & Company LLC reduced their target price on Red Cat from $20.00 to $15.00 and set a “buy” rating on the stock in a research report on Friday, August 7th. Piper Sandler began coverage on Red Cat in a research note on Wednesday, September 2nd. They issued a “neutral” rating and a $9.00 price target on the stock. Finally, Weiss Ratings reaffirmed a “sell (d-)” rating on shares of Red Cat in a research note on Friday, July 17th. Two research analysts have rated the stock with a Strong Buy rating, five have given a Buy rating, one has given a Hold rating and two have assigned a Sell rating to the stock. According to MarketBeat.com, the company currently has an average rating of “Moderate Buy” and a consensus target price of $16.71.

Red Cat Stock Performance

The stock’s 50-day moving average is $8.01 and its two-hundred day moving average is $9.79. The stock has a market cap of $580.56 million, a PE ratio of -5.84 and a beta of 1.51.

Red Cat (NASDAQ:RCAT) 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). Red Cat had a negative return on equity of 32.25% and a negative net margin of 136.26%. The firm had revenue of $20.20 million for the quarter, compared to analysts’ expectations of $22.65 million. Analysts forecast that Red Cat Holdings, Inc. will post -0.79 EPS for the current year.

Insider Activity at Red Cat

In related news, Director Christopher Moe sold 20,000 shares of the firm’s stock in a transaction dated Tuesday, August 11th. The stock was sold at an average price of $10.51, for a total transaction of $210,200.00. Following the completion of the transaction, 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 through this link. Also, CEO Jeffrey Thompson sold 150,000 shares of the business’s stock in a transaction dated Tuesday, September 15th. The stock was sold at an average price of $7.74, for a total transaction of $1,161,000.00. Following the sale, the chief executive officer owned 11,712,202 shares in the company, valued at $90,652,443.48. This trade represents a 1.26% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 225,000 shares of company stock worth $1,955,850 in the last three months. 12.50% of the stock is owned by company insiders.

Hedge Funds Weigh In On Red Cat

Hedge funds and other institutional investors have recently added to or reduced their stakes in the business. Sei Investments Co. purchased a new position in shares of Red Cat in the 1st quarter valued at about $2,328,000. BlackRock Inc. purchased a new stake in shares of Red Cat during the second quarter worth approximately $119,610,000. Janus Henderson Group PLC increased its stake in shares of Red Cat by 733.7% during the first quarter. Janus Henderson Group PLC now owns 392,808 shares of the company’s stock worth $5,141,000 after buying an additional 345,693 shares during the period. Deutsche Bank AG purchased a new stake in shares of Red Cat during the second quarter worth approximately $1,270,000. Finally, Van ECK Associates Corp acquired a new stake in Red Cat in the second quarter valued at approximately $27,193,000. 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.