ONDS · Ondas
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $6.88
Note written ·
Price against the kill line
25.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $6.88, on record since 11 November 2026. The shares are down 42.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $6.88, the highest close in the 20 sessions to 11 November 2026 and above the 50-day average, which would show the shares leading the S&P 500; or a fourth-quarter 2026 report with adjusted gross margin back above the second quarter's 50.4%.
Research onlyNot in the portfolio.
Catalyst
The business · as of
Ondas sells military and commercial drones, counter-drone systems and private industrial radio networks, mainly to Israeli and US defense buyers and to railroads and infrastructure operators. It earns money on hardware sales, services and software. Revenue was $167 million in the quarter to 30 September 2026, per its 10-Q filed 12 November 2026.
What is changing, and what follows · as of
- What is changing now
- On 12 November 2026 Ondas reported third-quarter 2026 revenue of $167.5 million, above its $140–$155 million guide, raised its 2026 target to at least $550 million, and reported adjusted gross margin of 34.8%, down from 50.4%.
- What follows for the company
- Revenue doubled from the previous quarter, but the adjusted EBITDA loss widened to $59.7 million, free cash flow was −$312 million over four quarters, and the diluted share count rose 137.8% from a year earlier.
- What follows for its customers, suppliers and competitors
- Red Cat (RCAT) and Draganfly (DPRO), US drone makers whose shares move with Ondas on drone-policy news, now compete against a rival with $835 million of backlog and $789 million of cash and short-term investments.
What the price assumes · as of
At the 13 November 2026 close (filed figures to 12 November 2026) the shares trade at 6.5 times sales and 1.2 times book, for an enterprise value of $2,171 million; EV/EBIT is not meaningful and the free-cash-flow yield is −10.6%. That holds only if revenue keeps compounding from $167 million a quarter while the −113.1% operating margin moves toward break-even.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 12 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 168
- Revenue, change on a year (%)
- +1558.6
- Gross margin (%)
- 21.8
- Operating margin (%)
- −113.1
- Free cash flow, four quarters ($M)
- −312
- Net cash, cash less debt ($M)
- 774
- Price to earnings (×)
- 26.8
- Enterprise value to sales (×)
- 6.5
All filed numbers
What Ondas reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 168 | +1558.6 | 21.8 | −113.1 |
| first filed | 83.8 | +1235.4 | 43.1 | −194.5 |
| first filed | 50.1 | +1079.9 | 49.2 | −85.1 |
| first filed | 30.1 | +629.2 | 42.3 | −77.4 |
| first filed | 10.1 | +581.9 | 25.8 | −153.5 |
| first filed | 6.3 | +554.9 | 53.1 | −147.5 |
| Pre-tax income ($M) | −56.4 |
| Net income ($M) four quarters: 110 | −64.7 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +137.8 |
| Operating cash flow ($M) | −291 |
| Capital spending ($M) | 20.8 |
| Free cash flow ($M) | −312 |
| Cash and short-term investments ($M) | 789 |
| Debt ($M) convertible debt plus notes | 15.4 |
| Net cash, cash less debt ($M) | 774 |
| Deferred revenue ($M) +1702.9% on a year | 41.1 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 127 |
| Inventory ($M) | 111 |
| Shareholders' equity ($M) | 2,367 |
| Market value ($M) at the 13 November 2026 close, filed figures to 13 August 2026 | 2,944 |
| Enterprise value, market value plus net debt ($M) | 2,171 |
| Enterprise value to sales (×) | 6.5 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | 26.8 |
| Price to book value (×) | 1.2 |
| Free-cash-flow yield (%) | −10.6 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 44.5% of shares outstanding sold short, 4.6 days of average trading to cover, +11.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $106K |
| 12 monthsfrom | $0 | $44.3M |
Linked companies · as of
- Competitors:
- RCAT, DPRO
The thesis
Ondas Inc. shares are more likely to lag the S&P 500 over the next three months than to lead it. Revenue now backs the order headlines, but gross margin halved, losses widened and the share count keeps rising. The fourth-quarter 2026 report, expected around March 2027, settles whether margins recover. Management has guided that quarter's revenue above $250 million and says its operating platform will reach adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) profitability in it.
The company reported on 12 November 2026. Third-quarter 2026 revenue was $167.5 million, above its $140–$155 million guide, double the $83.8 million of the second quarter and more than 16 times the $10.1 million of a year earlier. The company raised its 2026 revenue target to at least $550 million and set an initial 2027 target of at least $1.1 billion, excluding further acquisitions.
The market sold the beat and kept selling. The shares closed at $5.32 on 12 November 2026, down from $5.73 the session before, and at $5.16 on 13 November 2026. On 13 November 2026 Needham cut its target to $14 from $19 and Lake Street cut its target to $14, both keeping Buy ratings, per Benzinga and Fiscal.ai. The rating is Low because the report moved costs and dilution faster than it moved profit, and the price has not yet shown buyers returning.
Bullish and bearish views on Ondas Inc.
The bull case on Ondas Inc. (ONDS), in brief: revenue beat the top of guidance. The bear case: gross margin fell by half.
Bull case
- Revenue beat the top of guidance. Third-quarter revenue of $167.5 million beat the $140–$155 million guide, per the company's 12 November 2026 results release. Benzinga put the consensus estimate at $148.0 million and the loss of $0.10 a share against a $0.14 estimate.
- Orders and backlog keep growing. Ondas booked $214 million of orders in the third quarter, and backlog rose 36% from the previous quarter to $835 million, per the 12 November 2026 release. Deferred revenue was $41 million at 30 September 2026, up 1,702.9% from a year earlier, per the 10-Q.
- Guidance went up. The 2026 revenue target rose to at least $550 million from $525–$550 million, against a $536.5 million estimate cited by Benzinga on 12 November 2026. Fourth-quarter revenue is guided above $250 million.
- Company-wide breakeven moved earlier. Management now targets company-wide adjusted EBITDA break-even in the third quarter of 2027 instead of the fourth, per the 12 November 2026 release.
- The balance sheet funds the plan. Cash and short-term investments were $789 million at 30 September 2026 against $15 million of debt, per the 10-Q filed 12 November 2026.
Bear case
- Gross margin fell by half. Gross margin was 21.8% in the third quarter against 43.1% in the second, per the 10-Q. Adjusted gross margin fell to 34.8% from 50.4%, per the 12 November 2026 release.
- Losses widened as revenue doubled. The third-quarter adjusted EBITDA loss was $59.7 million against $46.2 million in the second quarter, and the net loss was $64.7 million, per the release. The operating margin was −113.1%, per the 10-Q.
- Cash burn is heavy. Free cash flow was −$312 million over the four quarters to 30 September 2026, with operating cash flow of −$291 million, per the 10-Q.
- The share count keeps climbing. Shares outstanding were 590,159,870 at 30 September 2026 against 529.8 million at 30 June 2026. The diluted share count rose 137.8% from a year earlier, per the 10-Q, as acquisitions were paid partly in stock.
- Acquisitions drive much of the growth. Six acquisitions closed in the third quarter, including DZYNE, Cyberhawk and Caribou Labs, per the release. The 64% organic growth figure is pro forma, so it counts acquired businesses as if Ondas had owned them a year earlier.
Price setup
The shares closed at $5.16 on 13 November 2026, above the 52-week closing low of $4.52 set on 5 November 2026 and 66.2% below the 52-week intraday high of $15.28 on 12 January 2026. Based on adjusted daily closes, the three-month change is −42.7% from $9.00 on 17 August 2026. The shares sit below their 50-day average of $6.67 and their 200-day average of $8.70, both as of 13 November 2026.
The shares rose from $5.33 on 6 November 2026 to $5.97 on 9 November 2026, held $5.57 on 10 November 2026 after a Digital Bat attack-drone purchase order with undisclosed terms, and reached $5.73 on 11 November 2026. The report and the target cuts then took them back to $5.16. The spread of 63-session returns across US stocks trading at least $5 million a day was 27% in 2026, so a three-month move of this size is common for a small-cap name.
Benzinga listed Ondas among heavily shorted stocks on 11 November 2026. A common market view is that heavy short interest can produce sharp rallies on good news; the 12 November 2026 beat did not produce one. Insider selling has been small: SEC Form 4 filings show the CFO sold 4,952 shares at $7.74 on 24 September 2026 and director Richard Cohen sold 7,500 shares at $8.96 on 18 August 2026 under a Rule 10b5-1 plan. Director Randy Seidl exercised options on 9,298 shares on 1 October 2026.
Catalysts ahead
- 31 December 2026: End of the fourth quarter of 2026, by which management targets revenue above $250 million and operating-platform adjusted EBITDA profitability. Sets the quarter the next report is measured against: revenue above $250 million and a turn to profit at the operating platform, against a third-quarter adjusted EBITDA loss of $59.7 million.
- ~March 2027 (est.): Fourth-quarter and full-year 2026 results; date not yet announced. Shows whether the 2026 revenue target of at least $550 million is met, whether adjusted gross margin recovers from 34.8% and whether the share count keeps rising.
What would change the view
A daily close above $6.88, the highest close in the 20 sessions to 11 November 2026 and above the 50-day average, which would show the shares leading the S&P 500; or a fourth-quarter 2026 report with adjusted gross margin back above the second quarter's 50.4%.
What it trades with
Ondas trades with other US small-cap drone and defense names, notably Red Cat and Draganfly. The three rallied together on 14 August 2026 after the White House drone tariff proclamation, so drone-policy headlines can move the group more than any one company's results.
Revenue is concentrated in Israeli and US defense procurement, so one budget cycle and one region carry a large share of sales. Palantir and Nvidia are linked to Ondas through the Regna AI venture announced on 21 October 2026, so news from either company can move Ondas shares.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $167.5 million, up from $83.8 million in the second quarter and $10.1 million a year earlier; pro forma organic growth was 64%. Ondas third-quarter 2026 results release (Form 8-K Exhibit 99.1) · as of
- Third-quarter 2026 gross margin was 21.8% against 43.1% in the second quarter; adjusted gross margin was 34.8% against 50.4%. Ondas third-quarter 2026 results release and 10-Q · as of
- Third-quarter 2026 adjusted EBITDA loss was $59.7 million against $46.2 million in the second quarter; net loss was $64.7 million. Ondas third-quarter 2026 results release (Form 8-K Exhibit 99.1) · as of
- Third-quarter bookings were $214 million and backlog rose 36% from the previous quarter to $835 million. Ondas third-quarter 2026 results release (Form 8-K Exhibit 99.1) · as of
- The 2026 revenue target was raised to at least $550 million from $525–$550 million; fourth-quarter revenue is guided above $250 million; the initial 2027 target is at least $1.1 billion excluding new acquisitions. Ondas third-quarter 2026 results release (Form 8-K Exhibit 99.1) · as of
- Free cash flow was −$312 million over the four quarters to 30 September 2026; cash and short-term investments were $789 million against $15 million of debt. Ondas third-quarter 2026 Form 10-Q · as of
- The diluted share count rose 137.8% from a year earlier in the quarter to 30 September 2026; shares outstanding were 590,159,870. Ondas third-quarter 2026 Form 10-Q · as of
- Needham cut its price target to $14 from $19 and Lake Street cut its target to $14, both keeping Buy ratings. Benzinga and Fiscal.ai, 13 November 2026 · as of
Sources
- Ondas Posts Record Q3 2026 Revenue of $167.5 Million on Strong Bookings and Backlog Growth; Raises Full-Year Outlook · sec.gov ·
- Ondas Q3 2026 slides: 16x revenue growth amid profitability push · investing.com
- Earnings call transcript: Ondas tops Q3 2026 estimates but shares fall · ng.investing.com
- Ondas Holdings Q3 2026 Earnings Call Transcript · benzinga.com
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