Why Red Cat Stock Popped Again Today

Red Cat Holdings (NASDAQ: RCAT) stock roared last week, after preannouncing sales results for Q4 2025 showing a 1,842% increase to between $24 million and $26.5 million.

Red Cat stock is moving even higher today, clawing out another 3.7% gain through 10:30 a.m. ET -- and you can thank Northland Capital for that.

Image source: Getty Images.

Northland loves Red Cat

Northland raised its price target on Red Cat stock to $22 per share while reiterating its outperform rating on the U.S.-based manufacturer of drones for the military.

Northland called Red Cat's Q4 sales proof of its ability to rapidly scale production, and called Red Cat "uniquely positioned as a leading UAS and USV vendor," as TheFly.com reports.

Northland might be right. Last month, if you recall, the Federal Communications Commission announced it is banning the sale of foreign-made drones and drone parts in the U.S. Some drone models -- not made in China -- have already been exempted from the ban. Still, as regards the most popular drone models from China, the FCC decision does appear likely to benefit Red Cat.

Is Red Cat stock a buy?

That said, I'm not certain even the FCC ban is enough to make Red Cat "uniquely positioned" here. Don't get me wrong. The company's sales gains in Q4 were impressive. But even annualized, $24 million to $26.5 million in quarterly sales puts Red Cat at only about $100 million in annual revenue.

That's just a small fraction of the $1.4 billion in drone revenue that AeroVironment (NASDAQ: AVAV), America's biggest pure-play producer of drones, brings in in a year. And AeroVironment stock is profitable. Red Cat is not.

Until the company proves it can both sell drones, and sell them profitably, Red Cat stock remains a sell for me.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AeroVironment. The Motley Fool has a disclosure policy.