Wall Street shorts target Ondas as defense tech firm eyes $525m revenue target
Despite a 40 per cent short interest driven by dilution and backlog conversion fears, Ondas Networks reports surging revenue and holds $1.47 billion in cash.
Ondas Networks, a US-based defence and infrastructure technology provider, is facing intense scrutiny from Wall Street as short interest in the stock climbs to approximately 40 per cent. Investors are betting against the company’s ability to convert its substantial backlog into revenue and are concerned about potential share dilution following a series of aggressive acquisitions.
The skepticism stems largely from Ondas’s strategy of expanding through purchase, including the recent acquisition of drone inspection firm Cyberhawk for roughly $125 million. This deal is the latest in a series of transactions that has transformed the company from a small drone manufacturer into a larger defence platform. Critics argue that the company has funded much of this expansion by issuing new shares, including a nearly $1 billion equity offering, which risks reducing the value of existing holdings.
Compounding these concerns is the slow pace at which Ondas is turning its $450 million backlog into actual revenue. Bears on Wall Street are wagering that the gap between the company’s order book and its revenue delivery will remain wide, keeping the stock suppressed despite its growing scale.
However, bulls argue that the market is undervaluing the company’s fundamentals. Ondas has raised its 2026 revenue target to at least $525 million, a significant increase from previous guidance. The company reported a 605 per cent year-on-year revenue increase to $50.7 million in 2025, with first-quarter 2026 revenue reaching $50.1 million, significantly exceeding market expectations.
Validation of its defence capabilities has also increased, with Lockheed Martin incorporating Ondas technology into one of its own systems. Additionally, the company’s balance sheet is considered robust, holding $1.47 billion in cash against just $17 million in debt. This net cash position addresses dilution concerns by providing ample funding for expansion without the immediate need for further share sales.
Analyst sentiment remains overwhelmingly positive. A consensus of nine Wall Street analysts maintains a "Strong Buy" rating for the stock, with a mean price target of $18.61. Roth Capital analyst Scott Searle recently initiated coverage with a "Buy" rating and a $13 price target, noting that Ondas has evolved into a diversified defence technology company through 14 acquisitions.
The stock has increased nearly 173 per cent over the last 12 months, outperforming the iShares US Aerospace & Defence ETF. Despite this growth, the stock trades at a price-to-sales ratio of approximately 9.9 times, which is roughly a third of its five-year average, suggesting a considerable discount to its historical valuation.
Ondas aims to exceed 50 per cent gross margins in the coming quarters, with a long-term target of 60 per cent. The company is set to report its second-quarter earnings on 13 August, a date that will serve as a critical test for its ability to efficiently convert backlog into cash flow and revenue growth.
