Both James "Rev Shark" DePorre and I have written extensively about a small drone company named Draganfly ( DFLYF) . We don't delve into the world of over-the-counter very often, but if you're looking for drone-related names, there's not much to choose from on the public markets, unless you want a focus on defense or military. Even there, the pickings are slim. Most investors have been left to a component piece of a drone to have "exposure," but that often carries risk associated with the rest of that particular company's business.
Draganfly and AgEagle Aerial Systems ( UAVS) have been the purest plays in my view. There's also Drone Delivery Canada ( TAKOF) as well. Draganfly has been somewhat trailing the pack in its success to attract investor attention, yet it's Draganfly that has been landing contract after contract. I think the biggest problem is many of those contracts were related to the software and artificial intelligence that the company developed for use of, and in its, drones. Those advances have been overlooked, although I don't believe they should be.
That kind of thinking, however, is why today's news is significant. The company announced an agreement to become the exclusive (key word) supplier of drones for Woz ED. If the name Woz sounds familiar, it should. Woz ED is Steve Wozniak's education company. You may remember him. He co-founded a small company named Apple ( AAPL) .
Unlike some previous announcements, we get some scope of revenue numbers here. Draganfly will be providing 3,000 drones, ranging in price from $150 to $5,000. Obviously, not every drone will be $150 and not everyone will be $5,000, so we know revenue will be above $450,000 and below $15 million for the scope of the drone orders. A reasonable estimation puts it in the lower half, probably in the $2.5 million to $4 million range. Again, this is speculation, but that puts it in the lower quadrant of the range.
Even at the low end of that range, we're talking about a revenue figure about twice what UAVS earned last year and more than what DFLYF saw for the year. And that's just the drone part of the contract. Additionally, Draganfly will be providing assistance, consulting and design work with the curriculum. One could anticipate this to become recurring revenue on both the number of drones ordered each year or every few years as well as an ongoing fee for the consultation and curriculum part of the business. This could evolve into professional development, as well.
Shares are up 26% on the news, but that still leaves it less than half the valuation of UAVS while looking at revenue growth that is going to be in the hundreds of percent this year. While it won't get there overnight, there's no doubt DFLYF is wildly undervalued compared to its peers. Heck, TAKOF has a larger market cap still and it had zero revenue in 2019.
If you like the drone market, drone industry, and have growth in mind for your portfolio, DFLFY is worthy of consideration. This should get uplisted to the Nasdaq in the next few months, as well, which should be a catalyst for higher prices. If you own UAVS or TAKOF rather than DFLYF, I have to ask why? Seriously. I'm asking. Drop me a note with your thesis.
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