RCAT Stock Forecast & Price Target

Red Cat Holdings Inc is positioned for significant revenue growth, projected to reach $60 million in 2025 and $125 million in 2026, driven primarily by the SRR2 LRP contract and increased sales of its Edge 130 drone systems. The company’s strong cash balance of $206.4 million as of Q3 2025, up from $65.9 million, provides a solid financial foundation to support its expansion initiatives and upcoming product launches, including unmanned service vehicles anticipated to ship in 2Q26. Additionally, with a substantial increase in funding for unmanned aerial systems from the Department of Defense, totaling over $5 billion, Red Cat is well-positioned to capitalize on emerging market opportunities in next-gen unmanned domains, leading to potential gross margin improvements and sustained revenue growth.

Red Cat Holdings Inc has lowered its 2025 revenue guidance to between $34.5 million and $37.5 million, approximately 44% below consensus expectations, primarily due to the impacts of a government shutdown and delays in new product launches, particularly the Edge 130. Additionally, the company reported a significant decline in GAAP gross margins, which fell to 6.6% from 11.7% on a quarter-over-quarter basis, compounded by higher-than-expected operating expenses leading to a revised adjusted EBITDA estimate reflecting an increased loss of $48.3 million. These factors, alongside execution risks tied to scaling in new unmanned domains, raise concerns about lower growth prospects and heightened cash burn, potentially resulting in substantial multiple compression for the company's stock.