Down 71% since October, should you buy DroneShield shares now?

DroneShield Ltd (ASX: DRO) shares are enjoying a welcome day of strong gains today.

Shares in the S&P/ASX 200 Index (ASX: XJO) drone defence company closed yesterday trading for $1.835. During the Thursday lunch hour, shares are swapping hands for $1.925 apiece, up 4.9%.

For some context, the ASX 200 is just about flat at this same time.

I mention that today's gains are especially welcome, as DroneShield shares have come under intense selling pressure since the stock notched a record closing high of $6.60 on 9 October.

How intense?

Well, according to my trusty calendar, the ASX 200 stock has plunged 70.8% from that record high. Though, I should note that the share price remains up an impressive 175% since this time last year.

But with the stock now well off its October levels, is it a screaming bargain or the veritable falling knife?

Are DroneShield shares now on sale?

Red Leaf Securities' John Athanasiou recently ran his slide rule over the company (courtesy of The Bull).

"The company provides artificial intelligence based platforms for protection against advanced threats, such as drones and autonomous systems," Athanasiou said.

"The stock plunged after disclosures to the ASX revealed DRO directors had been selling their holdings," he noted of the recent collapse in DroneShield shares.

"The company announced that November contracts were inadvertently marked as new ones rather than revised contracts due to an administrative error," he added.

Explaining his sell recommendation on the ASX 200 tech stock, Athanasiou concluded:

In our view, such an error raises governance and confidence concerns among investors. The shares have fallen from $6.60 on October 9 to trade at $1.997 on November 27. We believe the shares will remain under pressure.

What's been happening with the ASX 200 defence stock?

As Athanasiou mentioned above, investors pummelled DroneShield shares on 13 November following revelations that CEO Oleg Vornik had sold 14.81 million shares in the company the week before. A number of other company directors also sold significant shareholdings in the company that same week.

While Vornik's divestments earned him $49.47 million, the news sent shares in the ASX 200 defence stock to close down 31.4% on the day.

Atop from further pressure following on acknowledgement of the erroneous contract announcement, the stock plunged another 19.6% on 19 November.

That came after DroneShield announced the unexplained resignation of its United States CEO, Matt McCrann. McCrann's resignation was effective immediately.

The post Down 71% since October, should you buy DroneShield shares now? appeared first on The Motley Fool Australia.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2025