Droneshield Ltd (ASX: DRO) shares have tumbled another 8.08% today. At the time of writing, the AI-powered drone technology company's shares are changing hands at $2.39 a piece.
The latest dip now means the share price has dropped a huge 63.7% since peaking at $6.60 per share in early October. The good news is that over the year, the share price is still 198.8% higher.
What happened?
Dronshield shares crashed 31.4% last Thursday. The drop appeared to be linked to the ASX announcement that CEO Oleg Vornick sold 14.81 million shares between 6 and 12 November. The shares totalled $49.79 million. There was no other price-sensitive news out of the company.
Selling activity of this kind tends to raise red flags for investors. It implies that management thinks the stock is currently overvalued. Although it could be that, just like many other investors, management is selling up following recent surges to take money off the table.
Following the plunge, the stock enjoyed a brief respite and pushed higher on Friday and jumped another 11.6% yesterday. Droneshield shares were the most traded in the market last week, with the majority of activity from buyers. This implies the bump came from investors buying back into the stock following the massive sell-off. Unfortunately, it looks like the increase was short-lived.
And now analysts and investors are scratching their heads, questioning when Droneshield shares will reach the bottom. Does the latest sell off mean there is more downside ahead? Or can we finally start seeing Droneshield shares starting to rise?
What do the analysts think about Droneshield shares?
Droneshield has not indicated that there will be any changes to its business outlook or strategy for rapid growth.
Yesterday, the AFR reported that Droneshield's house broker, Bell Potter, stated that the sale of almost $70 million in shares by the company's chief executive, chairman, and a third director has deterred interest from institutional investors.
According to the AFR, Bell Potter's institutional sales trader Richard Coppleson said the share sales this month saw plenty of big investors exiting.
"It's going nowhere for the rest of 2025 and so is dead money," he said.
"It's retail who are buying, as they think its now cheap and hoping they'll have 'Droneshield rally mark 2' in the next few months."
The broker currently has a buy rating and $5.30 12-month target price on Droneshield shares. That implies a potential 120.4% upside for investors at the time of writing.
Here's what I think
I still believe that the sharp sell-off of Droneshield shares is more about investor sentiment than any risk of an overpriced share price or a potential business collapse. Given Droneshield's strong growth plans, I think the latest share price collapse presents a fantastic buying opportunity for investors to get in ahead of the next period of growth.
