Drone Defense Disruptor Set to Undercut Competition by 12x Lower Prices
Direct Energy Weapon Provider Set to Dominate Anti-Drone Warfare
Summary
We typically prioritize business and financials over the technology itself. This approach tends to be more predictable and reliable in the long-term. However, sometimes we encounter company with solutions so dominant that we cannot pass on its alpha generation potential, as is the case here.
The company in question is the sole provider of Ultra Short Pulse lasers for anti-drone and anti-infrared missile applications, which belongs to the Direct Energy Weapon space. This rapidly growing market is expected to grow at a compound annual growth rate (CAGR) of 16%, reaching approximately $32bn by 2033.
Its solution in combating Unmanned Aerial Vehicles (UAVs) is 12 times cheaper and lighter than the alternatives while offering a faster firing rate and many times lower power needs.
The company has won all Research & Development contracts for USP lasers from the Department of Defense (DoD), propping its dominant position in further weapon development.
It holds nearly 30 patents, of which about 10 are classified by the Department of Defense.
Insiders own approximately 26% of the company.
Following successful indoor tests, the company will conduct field tests next month, which could serve as a strong catalyst for the stock.
We estimate that its Defense Total US Addressable Market (TAM) exceeds $16bn, while the company is currently valued at less than $0.5bn. Additionally, management is exploring potential sales to the NATO members and applications in medical, agricultural, and industrial sectors.
We project a substantial internal rate of return (IRR) of 25%, with a total potential upside of 6x.
This is an early-stage business that still requires further weapon testing, Department of Defense contracts, and investment in manufacturing capabilities, all of which carry substantial risks. However, its excellent product, competent management, favorable market conditions for Direct Energy Weapons, and significant upside potential may make it worth playing.