If you bought DroneShield Ltd (ASX: DRO) shares two years ago, you'll still be sitting on some very tidy gains of 103%.
However, as the chart below shows, shares in the S&P/ASX 300 Index (ASX: XKO) drone defence company have come under heavy selling pressure since hitting closing highs of $2.60 on 15 July.
In fact, at yesterday's closing price of 63 cents, DroneShield shares have crashed 76% from those lofty levels.
The drone defence stock initially came under selling pressure when some analysts began to question its soaring valuation. While the company has managed to achieve solid financial growth metrics, its share price looks to have flown well ahead of the growth outlook.
And according to Novus Capital's John Edwards, DroneShield could face headwinds on a new front this year, courtesy of US President Donald Trump.
Time to sell DroneShield shares?
"The company provides artificial intelligence based platforms for protection against advanced threats, such as drones and autonomous systems," said Edwards, who has a sell recommendation on DroneShield shares (courtesy of The Bull).
"The shares have fallen from $2.60 on July 15, 2024, to trade at 65 cents on February 6, 2025," Edwards said. And it could have further to slide from here.
As for why Trump's return to the White House could hamper the company's growth prospects, Edwards said:
We're concerned about the company's outlook given US President Donald Trump has committed to ending the war between Russia and Ukraine amid striving to bring sustained peace to the Middle East.
And he noted that while revenue has been surging, so to have DroneShield's losses.
"First half revenue from continuing operations rose 108% in full year 2024 when compared to the prior corresponding period. But the company's net loss was up 64%," Edwards said.
What's been happening with the drone defence company?
The latest comprehensive results we've seen from DroneShield shares were released on 25 October, when the ASX 300 stock reported its third-quarter results.
Highlights included an 18% year on year increase in quarterly cash receipts to $9.1 million, a record performance for the company's third quarter.
The strong quarter saw cash receipts for the first nine months of the year come in at $30.5 million. That was up 20% from the first three quarters of FY 2023.
At the close of the third quarter, DroneShield had a cash balance of $238.3 million and no debt. The company also reported $240 million in existing inventory by sale value held.
DroneShield shares closed down 1.6% on the day.
