The drone market is thriving and is a great investment opportunity. Both consumer drones and commercial companies are growing exponentially however the bulk of the income derives from military drones. Venture capital (VC) is flowing into the industry. Many of the smaller companies have or are about to list while many large existing publicly listed companies are heavily invested in the drone market. We look at the top 10 publicly listed drone companies.
Future Predictions for the Drone Market
The global drone market is expected to grow significantly, propelled by advancements in technology and widening applications. Key trends include the rise of drones with advanced AI capabilities, enabling autonomous operations and decision-making. These AI-driven drones could find increased adoption in sectors like agriculture, logistics, and defense. Moreover, 5G technology could catalyze this industry, improving remote operations, data transmission, and connectivity.
However, the industry also faces challenges such as privacy concerns, regulatory hurdles, and the need for efficient drone traffic management systems. As drone usage expands, managing air traffic, privacy, and security risks will become increasingly critical. Despite these challenges, opportunities exist for companies to innovate solutions like remote identification technology, advanced traffic management systems, and secure data protocols. These could also help shape industry standards, fostering trust among users and regulators.
Most indicators point to a strong steady growth in the sector. While military use is still the main income source there is excellent potential in the commercial sector.
The current revenue split is estimated to be:
- Military 70%
- Consumer 17%
- Commercial 13%
Urban air mobility, autonomous aerial delivery, and a range of commercial applications have exponential growth opportunities.
The Top 10 Listed Drone Companies
- The Boeing Company (NYSE:BA)
- Northrop Grumman (NYSE:NOC)
- AeroVironment Inc. (NASDAQ: AVAV)
- Lockheed Martin Corporation (NYSE:LMT)
- NVIDIA Corporation (NASDAQ:NVDA)
- EHang Holdings Limited (NASDAQ:EH)
- Joby Aviation, Inc. (NYSE:JOBY)
- Eve Holding, Inc. (NYSE:EVEX)
- Parrot SA (EPA: PARRO)
- Elbit Systems Ltd. (NASDAQ:ESLT)
The Boeing Company (NYSE:BA)
Boeing was founded in 1916 and the multinational’s headquarters are based in Arlington, Virginia. They are famous for their jet engines but are also one of the largest defence contractors and exporters in the U.S. Apart from aeroplanes, they produce satellites, telecommunications equipment, rockets, missiles, and rotorcraft. They are also heavily invested in the drone market.
The Boeing Company has been active in the research and development of drones for many years with a strong focus on Urban Air Mobility (UAM) and Advanced Air Mobility (AAM). They recently formed a joint venture with Wisk. Both companies will benefit from the combined skills, experience, and expertise available.
One of Boeing’s great achievements in the drone space is the MQ-25 Stingray. This is an aerial refuelling drone.
Another is the Boeing MQ-28 Ghost Bat, developed in Australia, and is a fighter drone. It has great potential for use in the U.S. Air Force as well as for export.
While the Boing share price has had a rough time in recent years, this was mainly due to the larger divisions. The covid pandemic hurt jet sales and they have been plagued by supply constraints and supplier quality issues, particularly with the 737 MAX. With time they are sure to overcome these setbacks and prosper.
Insitu, Boeing’s drone division is showing promising growth. Boeing has the expertise, experience, and contracts to take this division to great heights. You can read more on Boeing’s financial performance.
Northrop Grumman (NYSE:NOC)
The American multinational Northrop Grumman Corporation is a significant player in the defence technology and aerospace field. They are most famous for their bombers and are currently developing the B-21 bomber, a hotly contested contract, and a massive project. They employ more than 95 000 employees, and the Grumman Corporation has been going since 1930.
While their primary focus is manned aircraft including stealth bombers and jet fighters, they are making significant inroads in autonomous systems including the impressive HALE Unmanned Systems. The most outstanding feature is their exceptional endurance.
The Global Hawk Enterprise is a high-altitude UAS (unmanned aircraft system) capable of operating for more than 30 hours. A range of sensors can be attached according to the mission. They can safely and efficiently deliver ISR (intelligence, surveillance, and reconnaissance) details.
Read the Q2 2023 Northrop Grumman Earnings and other investment information. While the share price took a bit of a dip when U.S. military budgets were cut back, the company has a strong history as well as quality products, contracts, and connections. It is sure to bounce back, and the stock is expected to perform well.
AeroVironment Inc. (NASDAQ: AVAV)
Based in Arlington, Virginia, AeroVironment was incorporated in 1971 with a strong focus on UAS (unmanned aerial and aircraft systems). Their products include ground control systems/ ground support equipment, payload integration and a range of related products. Most of their work is based on military contracts.
The conflict in Ukraine has seen strong growth in demand for their products and services. It also provides good case studies for the U.S. defence market and its allies. The main AeroVironment products currently deployed in the conflict between Russia and Ukraine are the Switchblade 300 and 600 models. These drones have been a game-changer in how modern warfare is waged.
The share price took a 15.51% hit recently (late May 2023). The main reason for this is their lack of inclusion in the group of possible vendors for the FTUAS (Future Tactical Uncrewed Aircraft Systems) program. While this shook investor sentiment they still have great opportunities and this is likely to be a short-term dip with little impact. Many analysts give AVAV a buy rating.
Lockheed Martin Corporation (NYSE:LMT)
LMT or Lockheed Martin Corporation was founded in 1995 and its headquarters are based in Bethesda, Maryland. The U.S.-based multinational is active in the aerospace, defence, information security, space, and arms markets.
Employing more than 115 000 people, including roughly 60 000 scientists and engineers, they have some of the sharpest minds in the industry.
They have been developing and supplying the U.S. military and several allies with advanced autonomous systems for more than 20 years. Given the rapidly growing demand for autonomous technology and unmanned systems, they are dedicating considerable resources to this sector. This makes financial sense given their large government contracts and strong lobbying abilities.
Most of their revenue is derived from government contracts and, as we have seen, drones and UAVs (Unmanned Aerial Vehicles) are becoming increasingly important.
Some of their offerings include:
- Indago 3
This quadrotor UAV employs VTOL and deploys rapidly. It is widely used for ISR (intelligence, surveillance, and reconnaissance) operations. The Indago 3 is quiet, tough, and has great endurance of 50 to 70 minutes (with a payload).
- Stalker UAS
This is a stealthy and silent UAS with exceptional endurance and payload capacity. A Solid Oxide Fuel Cell provides the power. There are a range of launch and payload options. This video will give you more insight into the Stalker VXE UAS.
The share price has performed exceptionally well over the years, largely due to lucrative government contracts based on LMT’s advanced technology and abilities. While the UAS aspect of their business is small in comparison to other divisions, it is sure to grow substantially and offer significant returns.
You can see more investor and share price information.
NVIDIA Corporation (NASDAQ:NVDA)
American multinational NVIDIA is a diversified technology company. Their headquarters are based in Santa Clara, California and they were founded in 1993.
NVIDIA is best known for their game-changing GPUs (graphics processing units), and they have a major focus on AI (artificial intelligence) hardware and software. While these technologies are used in a wide range of devices and computers, they are ideally suited to autonomous systems including self-driving cars, robots, drones and UAVs.
Their technology is a perfect fit for the autonomous aerial market. Apart from their developments, NVIDIA has already done lots of work with Parrot. This video demonstrates an NVIDIA drone that uses deep learning and computer vision to fly accurately without GPS.
While it does not look likely that the company will be a fully-fledged drone production company, they are likely to form alliances, like the one with Parrot, allowing these companies to benefit from NVIDIA’s amazing AI and GPU technology.
NVIDIA is already a strong stock option and over time, the business in the drone and UVA market could bolster their revenue further. Look at NVIDIA’s latest results and other financial information.
EHang Holdings Limited (NASDAQ: EH)
Air Mobility is the focus of EHang Holdings Limited. This includes passenger transportation and logistics solutions using AAVs (autonomous aerial vehicles) and eVTOL (electric vertical take-off and landing aircraft). EHang Holdings is also active in aerial photography and cinematography, surveys, inspections, aerial firefighting, and emergency response.
After some early disappointments, they have made great strides in a range of UAVs and autonomous passenger drones. They have also established multiple international relationships that offer impressive potential.
Some of their leading developments include:
- EHang 184
This autonomous passenger drone has undergone extensive testing and has made multiple commercial flights since 2015. The 184 can reach speeds up to 62 mph plus and is designed for a single passenger. It could well be the solution to urban congestion and lengthy commutes.
- EHang 216
The 216 has been in operation since 2018 and has seen more than 1000 manned flights. It is a 2-seater model with 16 propellers. The current range is 30 to 40km. Apart from commercial transport and tourism, the 216 can also be deployed for aerial logistics and emergency medical delivery or collection.
While the share price has not seen much in the way of fireworks, as the regulatory issues are ironed out and the market evolves, EHang is well-positioned and connected to take advantage of this market. You can read more about their investor relations and the latest quarterly reports.
Joby Aviation, Inc. (NYSE:JOBY)
Focusing on the VTOL (vertical take-off and landing) market, Joby Aviation has its headquarters in Santa Cruz, California. They were founded in late 2009 and have realized several remarkable achievements. Among these is working on projects with NASA and Toyota as well as gaining approval from the U.S. Air Force.
Joby is also making inroads in the aerial ridesharing and air transportation sectors of the market. Both show massive growth potential.
Check out this video on Joby’s First Production Prototype Aircraft and this one where Joby Aviation unveils air taxi aircraft.
You can view their Q1 2023 financial results here. The future of Joby Aviation’s share price is difficult to predict. Some analysts believe it is slightly overvalued. They have some excellent technology and have built solid international relationships so many believe the prospects are positive.
Eve Holding, Inc. (NYSE:EVEX)
Another company focused on urban air travel solutions is Eve Holding, Inc. Based in Melbourne, Florida, the company offers training, technical support and maintenance, data services, systems for urban air traffic management systems, and the design and production of eVTOLs.
Eve invites you to “Reimagine human connections by creating safe, sustainable and accessible mobility experiences”.
It all started as a project with business accelerator innovators, Embraer-X. They are part of one of the world’s largest aircraft makers, Embraer. In 2020 the company became independent before merging with emerging technology-focused investment company, Zanite Acquisition Corp. They initiated an IPO (initial public offering) and went public in 2022.
It is still early days and difficult to predict the growth and earning potential just yet. Eve believes that they will have to wait until 2026 before they can get certification but are confident that they will meet the requirements and that the design and production side will be ready. This should see a rapid increase in interest and the share price.
You can see their latest financial results (Q1 2023) here.
Parrot SA (EPA: PARRO)
Based in Paris, France, Parrot is a familiar and respected name in commercial and consumer drones. Parrot has largely outgrown the popular Bebop and other consumer models and is putting most of its resources into enterprise and military drones.
They also do SaaS, data sensors, drone modelling software, Pix4Dmapper, and a range of related products and solutions. The company was founded in 1994 and Parrot has international services.
One of their leading products is the ANAFI Ai. This cutting-edge commercial drone is ideal for inspections, mapping, 3D modelling, surveying and a host of other applications.
It sports a 21-megapixel sensor for clear images and accurate detail. The IMU (inertial measurement unit) and GPS receiver allow for precision alignment and geotagging.
Another popular model is the ANAFI USA. It is a stellar thermal imaging drone that is a leading choice for military and commercial applications. The drone is light and compact and boasts a 32x zoom. Thermal imaging opens a range of applications for commercial inspections, search and rescue, and other applications. The size and weight make it possible to fly in areas where larger drones would not be permitted. It is highly versatile and robust. Note that the ANAFI USA does not have obstacle avoidance sensors so is only suitable for experienced pilots.
Despite having some exciting prospects, the share price has not fared well, and many say it is a poor short to medium-term investment. The shares are volatile however, they have good technology and skills in place. It could well bounce back and impress investors. You can read more about Parrot’s financials and performance.
Elbit Systems Ltd. (NASDAQ:ESLT)
Elbit Systems is an international company. They are based in Haifa, Israel and were incorporated in 1966. In 1996 they listed on the NASDAQ. They have a wide range of products and solutions mostly focused on the defence market. These include UAS, military helicopters and aircraft, aerostructures, and commercial aviation systems.
They have seen growing demand from their largest customer, Israel. There is little sign that Israel’s military needs will decline, if anything they will increase, along with more demand for drones and allied technology.
Some of their UAVs include:
- Elbit Hermes 90
- Elbit Hermes 450
- Elbit Hermes 900
- Elbit Skylark
- Silver Arrow Micro-V
- Silver Arrow Sniper
They are relatively small in comparison to some of the bigger players with a market capitalization of just over $9 billion. Most analysts are positive given the company’s steady growth, diversified products, and positive cash flow.
Here are more of Elbit Systems’ financial details and related information.
Factors to Consider When Investing in a Drone Company
There are several important points to give some thought to when selecting stock in drone companies.
• Past Performance
Investing in drone stocks is the same as any other stock decision. It is vital to evaluate past performance. Study their financials and look at their cash flow, revenue and profit trends, debt, and growth. Also, look at the EPS (Earnings Per Share) and the P/E (Price-to-Earnings Ratio).
- Regulatory Environment
One needs to understand the constraints and potential changes, both positive and negative, in the regulations of the countries where the company operates. Regulation and certification are two of the main hurdles facing drone companies, particularly those wanting to do AAM and aerial transport.
- Market Growth and Potential
Some sectors of the market show more growth potential than others. The consumer market is nearing maturity and is dominated by a few key players and some also-rans. Military use currently produces the lion’s share of revenue and profit, but commercial applications are about to take off.
Advanced air mobility, aerial transport, inspections, and a host of other commercial drone uses are poised for significant demand and growth.
- Competitive Landscape
Competition is heating up. Designing, developing, testing, and producing the end products take time and a large amount of money. Those with a head start will reap the rewards as the regulations and the market evolve.
- Leadership Team
The people at the top can make or break a company. Look at the history, skills, and experience of the management team.
Conclusion
The market is dominated by the U.S. and China, but several other areas have strong growth in the drone industry. They include India, Israel, France, Sweden, Japan, Germany, Denmark, and others. There is little doubt that there is awesome potential for growth in drones and drone services.
Provided the company has a sound concept and the skills and expertise to execute and manage the process, most drone stocks make an attractive investment. As regulations are still adapting, the growth might not be immediate so most would be considered a medium-term investment. Once the market and regulations evolve, many shares could skyrocket.
Most of the leading companies have a strong foothold but there is still space for new players, provided they bring something unique to the market.
Keep an eye on the performance of the leading companies, technological advancements, regulation changes and new developments so that you are in the know. The landscape changes rapidly.
