It’s a big day for investors in Red Cat (NASDAQ:RCAT). Shares of RCAT stock are up over 20% after a subsidiary of the drone company was awarded a major contract by U.S. Customs and Border Protection. The subsidiary, Teal Drones, received a multiple award blanket purchase agreement (BPA). A multiple award BPA means that the agency established the BPA with more than one vendor in order to create efficient pricing and competition. This award is also given if “the requirements of a BPA are very broad.” Additionally, the BPA has an estimated value of $90 million over a five-year period.
The contract received praise from Red Cat CEO Jeff Thompson. He commented:
“We are honored Teal was selected to provide U.S. manufactured drones that meet the rigorous technical requirements of the Department of Homeland Security. This award is a milestone achievement for George Matus and the entire Teal team, and to the foundation they have built over the past decade in arriving to this point.”
Furthermore, RCAT stock reported earnings this week with huge revenue growth. Investors will want to know more about the earnings report and the recent contract, so let’s dive right in.
What to Know as RCAT Stock Soars Higher On Contract Award
- Teal Drone recently opened a 26,000-square-foot facility in Salt Lake City that will help in fulfilling any orders arising from the contract.
- The Department of Homeland Security will be able to place drone orders from Teal Drones through the BPA contract.
- CEO Jeff Thompson believes that the “infrastructure bill that has a ‘Build America Buy America’ mandate” will help the business in satisfying drone demand across enterprise and government customers.
- Red Cat recently reported earnings for the fiscal quarter ended Oct. 31. The drone company reported revenue of $1.9 million, up more than 330% year-0ver-year (YOY). This quarter marks the sixth consecutive quarter of revenue growth for Red Cat.
- Moreover, Red Cat is still reaching for profitability. The company reported a net loss of $3 million, compared to a net loss of $640,000 YOY.
- During the quarter, NASA signed a contract with Skypersonic, a unit of Red Cat.
- Shares of RCAT stock are down more than 15% year-to-date, trailing the S&P 500’s YTD return of 26%.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
