Earnings Update: Red Cat Holdings (RCAT) And The Impending U.S. Army SRR Contract
Earnings Update: Red Cat Holdings (RCAT) And The Impending U.S. Army SRR Contract
If they win, the upside is still over 100% at these levels.
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If you remember, I initially shared an event-driven trade with you all on July 23rd and gave a performance update on August 16th. Both can be found below which includes the model math and breakdown.
But aside from the previous two updates, their earnings release on Monday, September 23rd was one that everyone was waiting on, including myself. Long story short, the SRR contract announcement that this trade was based on has still not been released.
Talk about a gut punch. Since the market closed on Monday, the stock is down 25% to settle at $2.36. However, Jeff made it known that the Army has technically already decided on a winner.
“In late August, at the Pathfinder Conference in Huntsville, Alabama, the Army mentioned during its speech that SRR had a clear winner. We are hoping to have an update from the Army for this call, but that is not the case.”
While the above means they’re still technically in the race, jumbled financial results and a dilutive warrant offering + share buyout of FlightWave I believe really added fuel to the fire for investors hoping for an SRR decision.
Below, I’ll go over my thoughts on the earnings results, what this means for a standalone company sans an SRR contract win and what I personally think is the status of the SRR contract.
To answer two quick questions I’m sure you have.
Yes, I’m still in it.
No, I haven’t sold. In fact, I bought a little more.
So now, let’s begin.
First things first, let me go over my thoughts on what I think is going on with SRR which I have to caveat is highly speculative and is not based on anything other than what I’m interpreting from the financials and Jeffrey’s commentary on the call.