Al Root
Airo Group makes drone technology, an industry booming right now. Still, its stock was down after the company posted weaker-than-expected quarterly results.
The company, which makes the RQ-35 Heidrun reconnaissance drone, used in Iran and Ukraine, reported fourth-quarter operating profit of $6 million from sales of $48.3 million. Wall Street was looking for $8.5 million and $52 million, according to FactSet.
For 2026, Airo expects revenue growth from 15% to 25%, indicating sales of about $110 million. Wall Street projects sales of about $134 million.
In midmorning trading, the stock was down 8.8% at $7.82. The S&P 500 and the Dow Jones Industrial Average were up 1.3% and 0.9%, respectively, gaining on hopes that the Iran conflict would end soon.
Airo is walking away from its electric air taxi business, which may have surprised investors. It was working on electric takeoff and landing, or eVTOL, aircraft through its Jaunt Air Mobility subsidiary. Jaunt would have been a competitor to the likes of Joby Aviation.
"Fundamentally, we think this makes AIRO a far more attractive pro-forma company as investors now gain the ability to underwrite what is essentially pure play drone exposure," wrote Cantor Fitzgerald analyst Colin Canfield in a Tuesday report, adding it will save the company some cash. He rates shares Buy and has a $20 price target.
The stock is far away from that level. Tuesday trading leaves shares down about 20% from the June 2025 IPO price. Shares traded as high as $39.07 shortly after the IPO.
Drones remain in focus for militaries around the world. Since the Airo IPO, shares of Kratos Defense & Security Solutions, Karman, and Red Cat are up 54% on average. Shares of AeroVironment are down 7%, tripped up by the potential loss of an antenna contract for the U.S. military.
The technology will remain hot. Now, investors have to pick the winners.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 31, 2026 13:16 ET (17:16 GMT)
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