Drone stocks surge on report Pentagon considering stakes in the industry
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Drone stocks rose Thursday on news that the Trump administration is in talks to provide financing to several companies, including a company in which Donald Trump Jr. is a shareholder.
The Pentagon has been in talks for months with a group of drone companies about potential financing deals, people familiar with the matter said. Wall StreetJournal. The deals could also include equity stakes that would give the federal government some ownership, the Journal reported.
shares Extraordinary Machines It rose nearly 50% after the Journal reported it was one of the companies in talks with the Pentagon. The deal will likely invite congressional scrutiny and the company’s involvement with Donald Trump Jr. It will raise conflict of interest concerns due to its relationship with. President Donald Trump’s eldest son is a shareholder and advisory board member.
Shares of drone manufacturers Kratos Defense and Security And AeroVironment increased by 14% and 17% respectively. Drone and Modern Warfare ETF (JEDI) It rallied 8%.
If these come true, the Pentagon agreements could be aimed at increasing domestic production and reducing the costs of unmanned aerial vehicles, weapons that are critical in modern warfare.
“Although unofficial, we believe this type of financing support is particularly meaningful for Unusual Machines, given the critical and supply-constrained nature of drone components and domestic manufacturing capabilities,” Needham analyst Austin Bohlig told clients in a note on Thursday.
The Trump administration has taken direct equity stakes from companies on a scale unprecedented in the United States outside of an economic crisis, war or other disaster. The administration has focused mostly on industries deemed important to U.S. national defense, such as critical minerals and semiconductors.
