DroneShield Ltd (ASX: DRO) shares fell to a fresh 52-week low on Monday, closing the day down another 2% to just $1.58 a piece.
The drone operator's shares have now lost around 53% of their value so far in 2026, and are down 64% over the past 12 months.
Image source: Getty Images
What happened to DroneShield shares in 2026?
After some heavy selling in late 2025, DroneShield shares started strong in 2026. Concerns around geopolitical volatility and instability in the Middle East saw governments around the world hike their defence budgets.
But by April, investors started turning their backs on the ASX defence stock amid concerns about whether the company's future growth prospects are large enough to justify its share price.
The share sell-off accelerated in May when DroneShield announced that the Australian Securities and Investments Commission (ASIC) had requested that the company provide reasonable assistance in connection with an investigation under the Corporations Act. The investigation relates to market announcements and share trading in November 2025.
Sentiment slumped even further when the company posted a disappointing first-half FY26 result last month.
DroneShield posted a 74% increase in revenue for the six months ending 30th of June, and a 229% increase in recurring revenue. But DroneShield also posted a statutory net loss after tax of $32.2 million, compared with a $2.1 million profit a year earlier. Underlying EBITDA also came in at a $12.4 million loss, compared with an $8 million profit posted in the first half of FY25.
DroneShield's revenue came in line with guidance expectations. But recurring revenue was a miss, at $11.5 million versus guidance of $14.2 million for the six-month period.
Even this month's news of DroneShield's new RfRecon weapon and new non-executive director, Lynne Saint, hasn't been enough to reignite confidence in the stock.
So, can DroneShield shares bounce back? Or has the defence stock well and truly passed its peak?
Are the shares a buy, sell, or hold now?
The experts are still divided on their outlook for DroneShield shares over the next 12 months, which means it's unclear whether the stock has the potential to rebound from the latest low.
TradingView data shows that of the four analysts, two have a strong buy rating and two have a sell/strong sell rating.
The target prices also vary. The average target price of $1.99 implies a potential 26% upside over the next 12 months, at the time of writing.
But the minimum $1.45 target price implies an 8% downside at the time of writing. And the maximum $2.60 target price suggests DroneShield shares could rise another 65% over the next 12 months.
My view on DroneShield shares
I think that at the current trading price, DroneShield shares are probably below fair value. But without any visibility of tailwinds to drive the share price higher over the next few months, I can't see a meaningful increase before the end of the year. All eyes will be on the company's full-year FY26 result, expected in February next year.
