Key Points
Red Cat beat on sales but missed on earnings last night.
Red Cat is winning contracts, growing production -- and losing a lot of money.
- 10 stocks we like better than Red Cat ›
Red Cat Holdings (NASDAQ: RCAT) stock crashed 17.8% through 10:40 a.m. ET Thursday after reporting mixed earnings last night.
Analysts expected the company, which makes military drones, to lose $0.14 per share in Q4. Sales were supposed to be $20.9 million, and Red Cat shredded the sales forecast with revenue of $26.2 million. But its quarterly loss topped $0.17 per share -- three cents worse than forecast.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
Red Cat Q4 earnings
The news wasn't all bad. Starting with the sales beat, Red Cat grew quarterly sales nearly 2,000% year over year, and wrapped up its fiscal 2025 with 160% sales growth. It cut its quarterly loss in half and slimmed its year-end losses as well. Still, it's costing Red Cat nearly as much to build its drones as it's able to sell them for.
2025 revenue was $40.7 million. 2025 cost of goods sold was $39.4 million.
So the company did earn gross profits. But after deducting operating expenses (research and development and selling, general, and administrative expenses, for example), the company ended with a $0.73 per share loss for the year.
What's next for Red Cat stock?
As the company heads into 2026, Red Cat CEO Jeff Thompson is optimistic that the sales growth, at least, will continue. The company has "strong momentum" and is winning contracts -- Black Widow drones for at least two customers in Asia were cited. It's partnering with rival AeroVironment (NASDAQ: AVAV) so that their respective drone products can operate together within a given military system.
And Red Cat is expanding production to support its growing sales, increasing total production space to 254,000 sq. ft. We just don't know yet at what point production scale will allow Red Cat to pivot from losing money... to earning profit.
Should you buy stock in Red Cat right now?
Before you buy stock in Red Cat, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Red Cat wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $510,710!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,105,949!*
Now, it’s worth noting Stock Advisor’s total average return is 929% — a market-crushing outperformance compared to 186% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of March 19, 2026.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AeroVironment. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
