DroneShield Ltd (ASX: DRO) shares are going through a difficult period.
The counter-drone technology company has fallen to a fresh 52-week low of around $1.59, leaving the share price a long way below its previous high of $6.70.
For investors prepared to accept a high level of risk, I think the lower price is becoming increasingly interesting.
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The business is still growing
The share price performance looks ugly, but I think it is important to separate that from what is happening inside the business.
DroneShield continues to convert growing global demand for counter-drone technology into revenue.
Its latest trading update showed FY26 committed revenue had reached $251 million, putting it inside management's existing revenue outlook of $250 million to $270 million. The company also reported $46 million of committed revenue for FY27 and beyond.
For me, that is encouraging because it shows the opportunity is moving beyond conversations and potential contracts. Customers are placing orders.
DroneShield also secured the first order for its recently released RfRecon product, which will be deployed to an existing Western European military customer before the end of 2026. The initial order is not financially material, but it does provide early validation for another product in the company's expanding range.
Why the opportunity still interests me
The long-term driver behind DroneShield has not disappeared just because the shares have fallen.
Drones are becoming a larger part of modern warfare, border security, and threats to critical infrastructure.
That creates demand for systems capable of detecting, tracking, and defeating them.
DroneShield already sells into military, government, law enforcement, and critical infrastructure markets around the world.
I also like that the company is investing to expand internationally rather than relying entirely on Australia.
If counter-drone spending continues increasing and DroneShield can establish itself as a meaningful supplier across several major defence markets, today's business could look very different in five or 10 years.
But this is still a high-risk investment
This is the part I would not understate. DroneShield remains one of the highest-risk ASX shares I would consider buying.
Revenue can be lumpy because defence orders do not arrive evenly. The company is still scaling quickly, and investors need to see that larger revenue translates into sustainable profits over time.
Competition could also intensify as governments commit more money to counter-drone systems and larger defence companies pursue the same opportunity.
Then there is the share price itself. A fall from $6.70 to $1.59 shows how violently market expectations can change. I would not assume that reaching a 52-week low means the shares cannot fall further.
For that reason, I would only consider DroneShield as a relatively small position within a diversified portfolio.
Foolish takeaway
At $1.59, I think DroneShield shares are a buy for investors with a high tolerance for risk.
The valuation is much less demanding than it was near the highs, while committed revenue continues to move in the right direction.
There is still plenty for the company to prove, particularly around profitability and execution.
But for patient investors willing to accept substantial volatility, I think the long-term counter-drone opportunity makes the current share price worth considering.
