DroneShield Ltd (ASX: DRO) shares have fallen further into the red on Thursday.
In Thursday morning trade, the shares hit a 52-week low of $1.42, down 4%. At the time of writing, the shares are trading at $1.44, down 3.37%.
The counter-drone operator's shares have now crashed by 57% so far in 2026. They're also down a huge 72% compared to this time last year.
Just a year ago, DroneShield shares were riding a wave of booming investor interest. But in late 2025 and into early 2026, they turned a corner and have been mostly tumbling ever since.
Image source: Getty Images
What happened to DroneShield shares?
DroneShield shares started the year strong amid a surge in conflict in the Middle East. During this time, governments around the world hiked their defence budgets.
But investors soon started to shy away from the technology stock following concerns that its growth prospects are out of kilter with its share price growth.
The share sell-off accelerated in May when DroneShield announced that it is being investigated by the Australian Securities and Investments Commission (ASIC).
ASIC's investigation is ongoing and relates to market announcements and share trading in November 2025.
Sentiment slumped even further when the company posted a disappointing first-half FY26 result in August.
DroneShield posted a 74% increase in revenue for the six months ending 30th of June, and a 229% increase in recurring revenue.
But the company also reported a statutory net loss after tax of $32.2 million, compared with a $2.1 million profit a year earlier.
Meanwhile, 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. And investors weren't impressed.
The share price was further depressed by news of DroneShield's newly appointed chief financial officer, Rebecca Lowde, and new non-executive director, Lynne Saint. It's not uncommon for investors to sell up on leadership changes because it implies potential for new uncertainties.
Even news last month that DroneShield's revenue is on track with FY26 guidance wasn't enough to reignite investor confidence.
What should I do with my shares now? Sell up, or wait and hold?
It looks like the experts are divided. TradingView data shows that, of four analysts, two have a strong buy rating, one has a hold rating, and one has a strong sell rating.
The average $2.01 target price implies a potential 40% upside over the next 12 months, at the time of writing. And some are even more optimistic that the shares have the potential to climb another 81% to $2.60 a piece.
And my view?
The ASIC investigation is concerning, and I think the share price did run too far earlier this year. But DroneShield is still continuing to generate new contracts, and a new leadership change might be exactly what the business needs to move into the next stage of growth.
I'd wait and hold for now.
