DroneShield Ltd (ASX: DRO) shares are tumbling today.
Shares in the S&P/ASX 300 Index (ASX: XKO) drone defence company – which will join the S&P/ASX 200 Index (ASX: XJO) on 22 September – closed yesterday trading for $3.21. In early afternoon trade on Thursday, shares are changing hands for $3.14 apiece, down 2.2%.
For come context, the ASX 300 is down 0.4% at this same time.
Image source: Getty Images
Are DroneShield shares coming off the boil?
If you've been following the stock, you likely know that DroneShield recently hit new all-time highs.
On 14 August, DroneShield shares closed trading for $4.23 apiece.
At that stage, the stock was up an eye-popping 464% year to date.
But the share price has run into headwinds since then, with shares now down 25.8% from that record high.
Though, you shouldn't feel too bad for longer-term stockholders, with shares still up 317% in 2025. And taking a step back, shares are up a remarkable 1,390% over five years.
Which may make today a good day to take profits.
That's according to Red Leaf Securities' John Athanasiou, who expects further selling pressure over the medium term (courtesy of The Bull).
"The company provides artificial intelligence-based platforms for protection against advanced threats, such as drones and autonomous systems," said Athanasiou, who has a sell recommendation on DroneShield shares.
Why the ASX drone defence stock is flying into headwinds
DroneShield is continuing to invest in artificial intelligence-driven solutions for its drone defence products.
"Informed by operator requirements and evolving industry trends, DroneShield has refined its Product & Technology roadmap to balance near-term enhancements with sustained investment in R&D and strategic partnerships," the company's chief technology officer said after the release of DroneShield's half-year results on 27 August.
Commenting on those half-year results, which saw DroneShield shares tank 10.4% on the day, Athanasiou said, "Profit after tax of $2.1 million in the first half of fiscal year 2025 was up from a loss of $4.8 million in the prior corresponding period. Revenue of $72.3 million was up 210%."
But he noted that the half-year ahead may not be as profitable.
According to Athanasiou:
However, DroneShield recently announced it wasn't selected as a systems integration partner (SIP) for the Australian Department of Defence LAND 156 contract, which we see as a significant setback. The SIP contract, reported to be worth about $45 million, represented a key near term growth opportunity within the broader $1.3 billion program.
Rounding off his sell recommendation on DroneShield shares, Athanasiou concluded:
In our view, the SIP miss increases uncertainty over near-term revenue, compounded by valuation concerns and reliance on government programs. DroneShield had previously won two contracts under the initial phase of the LAND 156 program.
