**Disclosures:** 1,200 share position with $8.80 entry
**TL\\DR**: Current Price: $9.15 | Average Analyst Price Target: $18.29 | 30-80% squeeze potential Current short interest as of writing (volatile and actively fluctuating): 44.59%
Fundamentals
Many in this sub complain about finding out about companies just as they've popped or already become overvalued. A lot of you have likely missed the CAPR rise today, but I believe ONDS is next in line.
Ondas is an autonomous defense systems company: their core products right now are Counter-UAS (unmanned aerial systems) defense, and they actively contribute their tech to the Iron Dome + SentryCS CoRF, a counter-drone detection system, + Optimus, a fully autonomous drone platform. They also dabble in intelligence acquisition and surveillance platforms, reflected by their recent acquisition of DZYNE (an autonomous defense platform) and of Cyberhawk, a drone asset management company.
Anyone who has been paying attention has seen that warfare has changed drastically in the last couple decades. The situations in Ukraine and Iran have shown that whoever has the most refined, integrated, and rapidly available drone systems will likely have the greatest control of the military theatre. Trump's constant flip-flopping recently fundamentally comes down to the fact that Iran can build rapidly disposable drone systems capable of attacking the American fleet just by the sheer number and efficiency by which they can be replaced; the global superpower right now is quite literally scrambling in the face of a far more feeble nation that got its act together on drones years ago. Any serious nation looking to put up a fight must have an excellent drone industrial complex.
This reality is the basis of my bull thesis: warfare is becoming increasingly reliant on drones, and companies like Ondas are rising to the occasion.
# The 6 Horsemen of My Bull/Squeeze Thesis
**1.** ***Short interest is high and climbing:*** Roughly 44% of float was short as of the most recent snapshot (Aug 13), up from under 35% in July. Rising short interest into a growth story means more and more capital is betting against a company whose own numbers keep beating expectations.
**2. T*****he fundamental bear thesis keeps failing to materialise***\*\*:\*\* My understanding of the classic reasons to short a small-cap growth name is (a) it'll run out of cash, (b) revenue growth will disappoint, or (c) the story is vaporware. None of those are true for ONDS:
* Cash position is over $1 billion, so bankruptcy/emergency-dilution risk is effectively off the table
* Revenue beat consensus for multiple consecutive quarters, with Q2 up 67% sequentially and full-year guidance raised to $525-550 million
* Real, durable demand tailwind: drone/counter-drone defense spending is a structural, multi-year theme, not a fad
**3.** ***A sector-wide catalyst could hit any day***\*:\* Defense/drone names move as a group on headline risk: new conflict escalation, a fresh government contract award, a competitor's positive data point, or new federal funding news for drone makers. It really does sit among the likes of Palantir and Anduril. Recent conflicts have already been cited by management as validating sustained demand, and any fresh geopolitical headline could reprice the whole group upward fast, forcing shorts to react simultaneously rather than at their own pace. Donald has already maxed out the U.S.'s long-range missile capability and is clearly unwilling to risk lives using short-range or "boots on the ground" options (not humanizing "the Don" here; I genuinely don't think this guy values any life other than his own; however, we've all seen his ego can't take the defeat of a drawn-out boots-on-the-ground conflict with hundreds of potential casualties).
**4.** ***Strong balance sheet removes a key "reason to stay short"****:* Shorts often hold a position specifically because they're betting on a capital crunch forcing dilutive raises at distressed prices. With over $1B in cash, that pressure valve is gone. This means some shorts who entered on a liquidity thesis no longer have a live reason to hold the trade, and could unwind simply because their original thesis stopped applying.
**5. I*****t's already proven it can move quickly:*** The stock ran from $1.71 to $15.28 within a single year, a 9x move. That tells you the stock has the volatility profile and retail/momentum following capable of producing an explosive squeeze when sentiment turns, independent of whether this specific week is the moment it happens. Relating to point 3: How much longer are the American people, and frankly the world as a whole, going to tolerate this tenuous situation with Iran? Nukes have been shown to be off the table; I believe the answer they'll turn to will be drones. The midterms are less than four months away, and pressure mounts toward extreme action as we get closer to that date.
**6.** ***Acquisitions are expanding the growth runway:*** A more neutral driver, but as I mentioned, the DZYNE and Cyberhawk deals, even with integration risk, mean the revenue base and addressable market are both growing. This gives bulls a forward story (not just a trailing one) to point to as justification for higher prices, which can pull in new long buyers who then add pressure on top of any short covering.
# The Bear Case
I promised to be balanced, so what is the bear case? I don't think I'm perfectly impartial here, so admittedly some of this side of the case has been collated from AI to get a broader picture:
**1. A meaningful chunk of the growth is bought, not earned** The jump in full-year guidance was driven substantially by the DZYNE acquisition rather than organic growth, and roll-ups carry real risks: integration execution, and whether the acquired company's forward numbers (set by a motivated seller) hold up, plus the dilution required to fund the deal. Shorts betting against "the growth story is inflated by M&A" have a defensible, specific thesis, not just generic skepticism. True.
**2. Valuation is stretched** EV/Revenue sits around 40x, with forward 2027 price/sales still above 10x heading into the print. That's rich even by aggressive growth-stock standards. High short interest here may reflect valuation discipline rather than a belief the business is failing, and valuation-driven shorts tend to be much stickier than "this company is about to go bankrupt" shorts, because a strong balance sheet doesn't invalidate a "this is priced for perfection" thesis the way it invalidates a liquidity-crisis thesis. My human counter to this is that the P/E equation changes in relation to war. Palantir is ridiculously overvalued and continues to rise regardless, because the military-industrial complex needs it. I believe ONDS will follow a similar path.
**3. Dilution has been heavy, and the float keeps growing, this is the kicker, guys** Recent equity raises brought in $855 million, with another $1.5 billion potentially available via warrants if shares reach $20, meaning as the price rises, more shares can hit the market, creating a natural overhead supply that works directly against squeeze mechanics. A shrinking, tightly-held float amplifies squeezes; a float that mechanically expands as price rises dampens them.
Again, my counter to this specific point: warrant-triggered dilution can actually be squeeze fuel, not squeeze suppression, under the right conditions. By that I mean if the stock is rocketing toward $20 on short covering plus momentum buying, the fact that dilution kicks in at that level doesn't necessarily cap the move. In the past, this has created a "battle zone" where the stock oscillates hard around that level as new shares get absorbed by continued demand. In strong enough squeezes, markets have chewed through much larger warrant/dilution overhangs before (SPAC-era meme stocks are a case study) without it stopping the initial spike; it just adds volatility at the ceiling rather than preventing the move up to it. Additionally, it's my view that already-issued dilution is a sunk cost, not an ongoing overhang. The $855 million already raised is done: those shares are already in the float, already reflected in current short-interest-as-%-of-float calculations. It's already priced into the current 41% figure. Pointing to it as a reason a future squeeze would be weaker double-counts something the market has already absorbed and adjusted to.
Thank you for listening to my TED Talk.