The DroneShield Ltd (ASX: DRO) share price ended Thursday in the green after a volatile day.
Shares in the All Ordinaries Index (ASX: XAO) drone defence company closed the day trading for $1.49 apiece, up 1.02%.
But, that still sees the DroneShield share price down 42.69% in eight trading days since setting a new all-time closing high of $2.60 last Monday, 15 July.
After that kind of retrace, is the ASX All Ords drone defence stock now a bargain buy, or is it still a falling knife?
Let's have a look.
Why has the DroneShield share price plunged 43%?
On Tuesday 16 July, the day after hitting new record highs, the DroneShield share price collapsed by 22.3% to end the day at $2.02.
Investors look to have overheated their sell buttons following an article in Capital Brief in which analysts called the company's valuation "wild", pointing to its market cap of $1.98 billion the previous day.
The next big sell-off came this Monday, 22 July. By the time the smoke cleared, the DroneShield share price was down another 20.9% at $1.55 a share.
That came following the release of DroneShield's half-year results.
Now those results were quite strong.
The company reported record revenue of $24.1 million over the six months to 30 June. DroneShield ended the quarter with a cash balance of $146 million and no debt.
Still, investors may have been selling the stock, noting the slowdown in second-quarter revenue. While first-quarter revenue came in at $16.7 million, second-quarter revenue declined by 55% to $7.4 million.
A bargain ASX buy?
Which brings us back to our headline question.
After crashing 43% in eight trading days, is the DroneShield share price a bargain now?
The answer depends partly on your investment horizon.
Over the short term, the stock may fall further. However, I suspect the worst of the selling action is over, with DroneShield's market cap now having sunk to $1.14 billion from $1.98 billion eight trading days ago.
I also don't see the threat of hostile drones abating any time soon. Quite the opposite, in fact. And the threat posed by these drones is only likely to grow alongside the rapid advancement of AI.
This means that I expect the demand for proven and effective counterdrone measures to continue growing for the foreseeable future.
As DroneShield's management noted on Monday:
As the geopolitical environment deteriorates globally, small drones continue to be used by bad actors, both State and non-State alike. Counterdrone/Counter-UAS (C-UAS) market remains at a negligible saturation point today, due to the nascent nature of the drone market.
This is in contrast to markets such as helmets, body armour and tactical radios, as those markets have existed for a relatively long time and are saturated as a result.
Despite the big pullback over recent days, the DroneShield share price remains up 338% since this time last year.
