Trump's Drone Tariffs Just Handed Ondas a Moat, Can It Convert Before the Cash Runs Out?
- Hawkmont Research
- 5 days ago
- 9 min read
HAWKMONT RESEARCH | EQUITY RESEARCH | COMPANY UPDATE
Ondas Inc. (NASDAQ: ONDS)
Tariff Tailwinds Meet a Record Quarter: Reassessing the Thesis After Q2
Hawkmont Research | Defense Technology | Autonomous Systems | Equity Research
August 18, 2026
TABLE OF CONTENTS
Executive Summary
Price and Market Snapshot
Q2 2026 Results: The Numbers Behind the Headline
The New Catalyst: Section 232 Drone Tariffs
Valuation and the Bull/Bear Debate
Balance Sheet and Capital Position
Risks
Hawkmont View
1. EXECUTIVE SUMMARY
Ondas Inc. has moved a long way since Hawkmont's March 2026 supplier ecosystem report. What was then a company guiding toward $375 million in 2026 revenue on the strength of six acquisitions has become a company guiding toward $525 million to $550 million, backed by a backlog that grew from $65 million at year end 2025 to $613 million at the end of the second quarter, and to roughly $757 million on a pro forma basis once the DZYNE Technologies and Cyberhawk acquisitions are included. Revenue in the second quarter came in at $83.8 million, up 67% sequentially and more than thirteenfold year over year.
Two developments since the last report change the setup meaningfully. First, the Q2 print itself, released August 13, showed the growth is arriving but so are the losses, with a net loss of roughly $89.7 million for the quarter. Second, on the same day Q2 earnings were being digested, President Trump signed a Section 232 proclamation imposing tariffs of up to 100% on imported drones and components, a policy explicitly designed to push military, government, and commercial drone demand toward domestic manufacturers. Ondas, alongside Red Cat, Unusual Machines, AeroVironment, and Kratos, was named repeatedly in the market reaction as a beneficiary, though the stock's move was more muted than smaller pure play peers.
The stock trades around $9.00 to $9.10 as of this writing, up sharply from its 52 week low of $3.20 but still well below its 52 week high of $15.28. The setup now is less about whether Ondas can win contracts, it clearly can, and more about whether the market is willing to pay a premium multiple for a company that is still burning significant cash while scaling toward the profitability targets management has laid out for late 2026 and 2027.
2. PRICE AND MARKET SNAPSHOT
Metric | Value | Notes |
Price | ~$9.00 to $9.10 | Intraday range has been volatile, $8.52 to $9.19 over the prior session |
Market Cap | ~$5.2 billion | Reflects share count expansion from 2025 to 2026 capital raises |
52 Week Range | $3.20 to $15.28 | Stock is roughly 40% below its 12 month high, nearly 3x its 12 month low |
Average Volume | ~85 to 106 million shares | Extremely high turnover for a company of this size, reflects retail and momentum interest |
P/E Ratio | Not meaningful | Company remains unprofitable on a GAAP basis |
Analyst Consensus | Buy to Strong Buy | Coverage from Oppenheimer, Ladenburg Thalmann, Maxim Group among others |
Average Price Target | Roughly $18 to $19 | Implies substantial upside from current levels if achieved |
Consensus among the sell side that actively covers the name skews bullish, with Oppenheimer raising its target to $18 from $16 following the Q2 print and reiterating an Outperform rating, and Ladenburg Thalmann lifting its target to $22.75. It is worth noting that broader, less specialized aggregators that pull in a wider analyst set sometimes show a more moderate consensus, so investors should treat any single price target with some skepticism and focus instead on the direction of revisions, which has been consistently upward through 2026.
3. Q2 2026 RESULTS: THE NUMBERS BEHIND THE HEADLINE
Ondas reported second quarter revenue of $83.8 million, compared with $50.1 million in the first quarter and just $6.3 million in the second quarter of 2025. On a pro forma, same portfolio basis stripping out acquisition effects, year over year revenue growth was still 85%, which is the more useful number for judging organic momentum rather than acquisition arithmetic.
Gross profit came in at $36.1 million for the quarter, up from $3.3 million in the prior year period, a gross margin of roughly 43%, a meaningful improvement that suggests the acquired businesses are not simply low margin pass through revenue. The company secured approximately $175 million in new orders during the quarter and disclosed that a further $105 million in orders had been captured quarter to date through August 10, signaling that third quarter bookings momentum has not slowed.
The headline concern is the loss line. Net loss for the quarter was approximately $89.7 million, and operating margin was reported at roughly negative 140%. This is a company still spending well ahead of revenue to build out its acquired platforms, integrate DZYNE and Cyberhawk, and staff up for delivery on its expanding backlog. Management's own targets call for Adjusted EBITDA profitability at the operating platform level by the fourth quarter of 2026, and company wide Adjusted EBITDA profitability by the fourth quarter of 2027, a timeline that has actually been pulled forward from prior guidance rather than pushed out, which is a modestly encouraging signal on cost discipline even as absolute losses remain large.
Full year 2026 revenue guidance was raised to a range of $525 million to $550 million, from a prior target that itself had already been raised earlier in the year. Third quarter revenue is guided to $140 million to $155 million. If achieved, that would represent close to a tenfold increase in annual revenue relative to 2025's $50.7 million base.
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4. THE NEW CATALYST: SECTION 232 DRONE TARIFFS
The most significant development since Hawkmont's last report on Ondas is not company specific at all. On August 13, 2026, the same day Ondas reported earnings, President Trump signed a proclamation under Section 232 of the Trade Expansion Act imposing new tariffs on imported unmanned aircraft systems and components, effective September 3, 2026. The structure is tiered. Drones exceeding 25 kilograms maximum takeoff weight, drones with thermal imaging capability, docking stations, and a list of critical components face a 100% ad valorem tariff. Smaller drones and general components face a 25% tariff. Imports from the European Union, Japan, Liechtenstein, South Korea, Switzerland, and Taiwan receive a reduced 15% rate contingent on substantially all hardware, software, and technology originating in those countries or the United States, while the United Kingdom receives a 10% rate.
The stated rationale, per the Commerce Department investigation underlying the proclamation, is that foreign made drones and components, overwhelmingly Chinese in origin, have captured outsized share of the U.S. market while domestic manufacturers lack the capacity to meet military, government, and commercial demand. This is directly aligned with the NDAA compliant, domestic manufacturing thesis Hawkmont laid out in the March supplier ecosystem report, where Kitron's Windber, Pennsylvania facility and Ondas' broader push toward U.S. based production were identified as structural tailwinds.
The market reaction on the news was instructive and worth noting for portfolio construction purposes. Unusual Machines, a smaller and more narrowly focused pure play, spiked sharply, reportedly over 20% in some sessions, while Red Cat rose meaningfully as well. Ondas moved higher too, but by a smaller magnitude in percentage terms, generally in the 3% to 5% range across the reporting window. The likely explanation, echoed across multiple financial media accounts of the move, is that Ondas' business spans drones, counter unmanned aircraft systems, ground robotics, secure wireless communications, and stratospheric platforms, so the tariff benefit is more diffuse across the company than it is for a single product, single segment competitor. That diffusion cuts both ways. It means Ondas is less exposed to any single component of the tariff regime being watered down or challenged, but it also means the stock does not re-rate as sharply on tariff headlines as its more concentrated peers.
5. VALUATION AND THE BULL/BEAR DEBATE
Bull case.
Backlog growth from $65 million to $613 million, and $757 million pro forma, in two quarters is a genuine inflection, not a rounding error. Revenue growth of 67% sequentially and gross margin expansion to roughly 43% suggest the acquired businesses are being integrated in a way that is accretive to unit economics, not simply diluting them. The new Section 232 tariff regime is a structural, multi year tailwind that applies across nearly every segment Ondas operates in, and it arrives at the same time the company is scaling U.S. manufacturing capacity. Sell side price targets in the $18 to $23 range, from analysts who have shown a pattern of raising rather than cutting estimates through 2026, imply the market has not yet fully priced the growth trajectory. Cash position, discussed below, gives the company real runway to execute without near term dilution risk.
Bear case.
A net loss of $89.7 million on $83.8 million of revenue is a burn rate that demands continued market patience and access to capital. The stock's average daily volume, often exceeding its own float multiple times over, points to a shareholder base that skews heavily toward momentum and retail participation rather than long duration institutional holders, which tends to produce sharper drawdowns when sentiment turns. The stock is already down roughly 40% from its 52 week high even as the fundamental growth story has, on paper, improved, which suggests the market extracted a great deal of the good news earlier in the year and is now demanding proof of execution and margin improvement before re-rating further. Acquisition integration risk is real and cumulative, DZYNE and Cyberhawk are the fifth and sixth acquisitions in roughly a year, and each adds operational complexity that has not yet been tested through a full cycle.
Hawkmont note on multiple.
With the company still GAAP unprofitable, a traditional P/E is not meaningful. On a price to sales basis using the midpoint of full year guidance of roughly $537 million against a market cap near $5.2 billion, the stock trades around 9.7 times forward sales, a premium multiple that is only justified if the backlog conversion and margin trajectory continue on their current path. Investors should treat this as a name priced for continued execution, not one priced for a margin of safety.
6. BALANCE SHEET AND CAPITAL POSITION
Ondas ended the second quarter with approximately $1.4 billion in cash, cash equivalents, restricted cash, and short term investments, a position built through a large capital raise completed in late 2025 and early 2026. The company subsequently deployed approximately $325 million of that balance in the third quarter to close the DZYNE Technologies and Cyberhawk acquisitions. Even after that outlay, Ondas retains a substantial cash cushion relative to its current quarterly burn rate, which materially reduces near term dilution risk relative to where the company stood a year ago. This is a meaningfully different capital position than the one Hawkmont described in the March report, when the acquisition spree was being funded through a mix of cash, stock, and ongoing capital markets activity. The current cash pile gives management genuine optionality, both to continue selective acquisitions and to fund the working capital buildup that a backlog this size will require as it converts to delivered revenue.
7. RISKS
Execution risk on integrating six acquisitions inside roughly eighteen months remains the largest company specific variable. A loss rate of this magnitude, even if narrowing on a percentage basis, means continued access to capital markets or further use of the cash balance is required, and any disruption to that access would pressure the stock. The tariff regime itself carries policy risk, Section 232 actions can be modified, litigated, or subject to country specific exemptions that shift the competitive calculus, and the reduced rate carve outs for the European Union, Japan, and other allied nations mean some foreign competition will persist even under the new framework. Government budget and appropriations timing remains a swing factor for a company whose backlog is increasingly defense and government weighted. Finally, high short interest and heavy retail participation, evident in the stock's outsized average volume relative to market cap, mean price action can diverge from fundamentals in either direction over shorter horizons.
8. HAWKMONT VIEW
The fundamental case for Ondas has strengthened since Hawkmont's March supplier ecosystem report, with backlog growth and the new tariff regime both working in the company's favor. The August 13 tariff proclamation validates the domestic manufacturing thesis that underpinned the earlier Kitron recommendation, and it extends that thesis directly to Ondas itself rather than only to its suppliers. That said, the widening net loss and the premium revenue multiple mean this remains a name for investors with a high tolerance for volatility and a multi quarter time horizon, not a value or income holding. Hawkmont's view is that Ondas is best sized as a smaller, higher conviction position within a diversified defense technology allocation, alongside lower beta, already profitable names, rather than as a standalone core holding. Investors should watch the third quarter print closely for evidence that the backlog is converting to revenue without a further widening of the loss, since that is the specific proof point the bear case is waiting on.
DISCLOSURES
This report is published by Hawkmont Research for informational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security. Hawkmont Research is an independent, conflict free research publication and does not accept compensation from the companies it covers in exchange for coverage. All data referenced in this report reflects publicly available information as of the date of publication, August 18, 2026, and is subject to change without notice. Past performance is not indicative of future results. Investors should conduct their own due diligence and consult a licensed financial advisor before making any investment decision. Hawkmont Research and its affiliates may hold positions in securities discussed in this report and may transact in those securities in a manner consistent with or contrary to the views expressed herein.
