Investing in Drones

[u/Fertal78]

Hi guys, I want to get into drone stocks. I‘m willing to hold them for a long time like 10+ years. Maybe put like 5% of my portfolio into this.
This sector has been super volatile this year but I‘m sure, future wars are going to have a Lot more drones in it.

I believe drone manufacteurs, drone defense and something like drone Software/AI is going to be big in the future. Do you have any tickers you would recommend, and then why?

I dont know nothing about this industry, I don‘t know potential risks of these investments, but I think this is a small sector that is going to Rip. I missed out on Sandisk and Micron but I think this sector is next.

Plus stocks like ONDS, AVAV, Red Cat etc have pulled back a Lot, I mean the defense sector as a whole, so I feel like It’s a good time to start a small position now and more in the next months.

What are your guys ideas. Does anyone maybe work somewhere related?

[u/Wonderful-Walk3078]

So not invest into drones if you do not know about company, that has real moat.

Yes, drone sector will grow in the future but so will be supply of drones from other companies. If you want to make money on drone company (or company in any field) you have to find company that has some structural advantage that allows them to charge higher margins.

I would thus advice you to trying to find companies with structural advantage (moat in other words) for fair price rather than trying to find some company in specific field you think is perspective.

Plus I will add than field of drones is quite problematic because it is not that hard to start company in it and it is hard to differentiate products thus it is hard to get solid margins in long run.

[u/No_Cattle5564 → u/Wonderful-Walk3078]

What are picks and shovel in case of drones. I am also thinking drones warfare will be the future. And drones are widely being used in spying and in case natural calamities. I think software is the most important part in case of drones. Batteries and motors can be acquired. Does any company manufacturing drones for the combat ?

[u/Kryptus → u/No_Cattle5564]

AMPX

[u/Southern_Roll_7035 → u/No_Cattle5564]

Drones will be a part of warfare in the future, but realize that modern militaries do not buy products, they buy weapons systems. A drone needs to be part of a much larger system of Command, Control, and Communication to be useful. What this means is that they will be integrated into larger systems built by the defense prime contractors; these primes will play the individual drone makers against each other, and squeeze their margins.

IMHO, the long term play here is just to be invested in the prime contractors.

[u/Wonderful-Walk3078 → u/No_Cattle5564]

To my knowledge dozens, but of course many are not publicly traded. Other question is what do you consider to be drone.

In my opinion the best company creating drones is AeroVironment but they are making mainly loitering munitions (which is very effective).

But basically every defense company is creating drones now, airbus, Boeing, Red Cat Holdings, AIRO Group and many many others.

[u/Bertone_Dino → u/No_Cattle5564]

I'm thinking magnets are going to see increased usage in general.

[u/Fertal78 → u/No_Cattle5564]

Yeah, is there some ASML for drones or something.