Investors sold Unusual Machines (UMAC +13.38%) stock after it reported earnings on May 14. That sell-off continued into this week, with the stock down as much as 9% at the low. But shares of the drone component maker rebounded sharply as investors considered the potential of this small-cap stock.
Unusual Machines stock ended the week in the black, up by 3.6%, according to data provided by S&P Global Market Intelligence.
Image source: The Motley Fool.
Drones are the future
Unusual Machines said its first-quarter revenue nearly quadrupled year over year as sales accelerated throughout the year. Though it’s off a low base, the pace of rising sales is what investors should note. Revenue jumped 65% just since Q4. The company is trying to keep up with demand. Management noted, “We are adding shifts and expanding capacity across all of our facilities.”
What might surprise some investors is that the small-cap company also announced a profitable quarter. There is also potential for expansion in both the domestic drone delivery and military drone markets.
Today’s Change
(13.38%) $1.98
Current Price
$16.78
Key Data Points
Market Cap
$802M
Day’s Range
$14.76 – $16.88
52wk Range
$4.81 – $23.38
Volume
6.9M
Avg Vol
4.6M
Gross Margin
34.07%
The primary risk lies in execution. If Unusual Machines can scale manufacturing while controlling costs to maintain and grow margins, the stock should have room to grow. The company says that every demand indicator is on the rise and believes the market is still in the early stages of development.
That potential had investors buying the dip this week, with increasing capacity suggesting further sales growth in the coming quarters.
Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
