In this fourth article about commercial drone stocks, let’s recap the true available drone stocks and discuss their performance in the context of broader stock market trends. To do this, we will focus on market capitalization, which is obtained by multiplying the current share price by the number of outstanding shares.

The market capitalization of commercial drone stocks often fluctuates due to a combination of internal factors like company performance and external influences such as market conditions and investor sentiment. Overall, the variations in market cap reflect both the obstacles and the potential within the industry, driven by factors such as competition, regulatory changes, and investor sentiment.

So, let’s begin with a look at the trends in market cap for two categories of companies: AAM and drone companies.

The 2024 market cap overview presents mixed outcomes for Advanced Air Mobility (AAM) companies. Companies like Archer and Joby Aviation saw declines of $506 million and $734 million, respectively. Vertical Aerospace and Lilium also reported negative performance, highlighting challenges in gaining investor confidence amidst financial uncertainties. In the particular case of AAM, such declines can be attributed to adverse investor and shareholder sentiment, which can be rooted in the company meeting or failing to meet promises and expectations. These examples reflect newer entrants’ hurdles, including navigating regulatory issues and sustaining R&D projects. On the other hand, Ehang is one of the most established players in the field, and it is the only profitable company in the infographic. But it is worth noting that they are only active in their local Chinese market.

Most AAM players are based in the USA, with Archer and Joby leading the field. There is also representation in Europe and Brazil, showing a broader geographic spread. However, financial volatility underscores these companies’ uncertain environment, where investor trust is closely linked to regulatory clarity and technological advancements.

The drone sector shows both progress and setbacks. AeroVironment stands out with a market cap change increasing by $2.28 billion, reflecting solid investor confidence. In contrast, Nordic Unmanned and Parrot experienced declines, suggesting market sentiment or operational performance challenges. Positive changes were seen for companies like Red Cat Holdings and JOUAV, reflecting their strategies for boosting market presence and investor confidence.

One key trend in the drone sector is the balance between consolidation and fragmentation. Consolidation occurs when dominant players expand through mergers or acquisitions, as in Volatus and Drone Delivery Canada (now Volatus Aerospace). On the other hand, the market remains fragmented, with more new and smaller players across regions like India, Japan, and Australia, suggesting high competition and diverse market participants.

To be clear, Droneii’s definition of commercial drone stocks excludes major corporations such as Amazonand military-heavy companies like Lockheed Martin and Northrop Grumman. The following group of stocks has also evolved and been adjusted from the original collection of drone stocks published in 2021.

The 2024 list of true drone stocks (combining AAM with the other drone companies) is dominated by drone manufacturers. Of the 25 companies on the list, 12 are drone manufacturers. This is closely followed by AAM (primarily eVTOL manufacturers), which features 6 publicly traded stocks, and the remainder are service providers or holdings companies.

Geographically, a majority (7) are American drone companies, but there are also 2 Chinese companies and 3 Indian companies as well as 2 Canadian ones. Despite the strong representation by these larger markets, drone stocks can still be found all around the world including South America and Australia. However, there are no drone stocks based in Africa, the Middle East (outside of Israel) or Southeast Asia. So the challenge remains of who will be the first publicly traded drone company in these regions.

The list of drone stocks that have been delisted includes: Aeronautics and Astro Aerospace as well as Airobotics and Drone Aviation Corp, which were both acquired by other companies. Finally, the 2023 blog post about drone stocks mentioned a “drone ETF” and argued that it was not actually a “drone ETF”, so it should not be a surprise to hear that the ETF has been delisted and no longer exists.

Some may be surprised that there is at least one index that is focused on tracking the performance of drone stocks. According to its description, the S&P Kensho Drones Index (^KDRONE) “intends to represent companies involved in the drone industry, and is composed of companies focused on drone-related activities as a principal component of their business strategy, as well as the supply-chain companies involved in the industry.”

However, this index features a lot of companies that do much more than unmanned aerial vehicles. Its description also alludes to “marine drones,” and the methodology also includes sensors, components, and communication hardware and software, all of which considerably expand the scope of the index and the companies that it may include. Moreover, neither the website nor the factsheet mention exactly which companies are included in the index. The factsheet only states that as of 30 August 2024, there are 19 companies, where 17 are from the USA, one is from China, and another is from Israel.

Finally, for those who may be more interested in the air mobility angle, there are also the S&P Kensho Advanced Transport Systems Index (^KATS) and the S&P Kensho Smart Transportation Index (^KMOVE). Unlike the other two indices, this particular final index is connected to an ETF currently priced at around US$28.40

Like the drone industry, the commercial drone stock landscape is in constant flux. As we’ve seen, market capitalizations fluctuate significantly, reflecting the potential and the challenges inherent in the industry. For investors and industry professionals alike, it’s also worth watching on emerging players and potential market entrants. Companies like Garuda Aerospace and Pablo Air plan to go public, while others such as Volocopter (who tried) and Alto Haps (which expressed interest in entering the stock market) may try to enter in the future. These developments could reshape the AAM and drone stock landscape soon.