Ondas Inc. (NASDAQ:ONDS) experienced a significant volume spike that enabled the former owners of DZYNE to sell a 40 million-share block registered after the acquisition, potentially eliminating a major overhang on the stock. No official filing has confirmed the transaction, but traders closely monitored the activity.
On Wednesday, Ondas shares fell 4.2% to $7.05 ahead of Thursday's open, while the Nasdaq Composite rose 0.6%. Over the past three sessions, more than 346.1 million Ondas shares traded, representing about 60.7% of the 569.8 million outstanding shares, which includes new stock from the acquisition.
The July 2 agreement allows sellers to offload up to roughly 10% of the previous day's trading volume. Based on full trading sessions since the July 6 resale filing, sellers could have moved 45.25 million shares by Tuesday, exceeding the 39,999,998 shares in the prospectus, assuming they pooled their limits.
Market data shows Ondas closing prices and volumes from July 6 to July 15, with the seller ceiling for the next session ranging from 7.34 million shares on July 6 to 13.10 million shares on July 15. Wednesday's turnover set a theoretical Thursday cap of 13.10 million shares, but if the block is fully sold, that limit may not matter. The prospectus notes sellers could sell any, all, or none of the shares, and Ondas stated it does not know how long holders will remain.
The immediate block is part of a larger equity package. Ondas spent about $200 million in cash and agreed to issue roughly 85 million shares to acquire DZYNE. The company delivered 40 million shares on July 2 and plans to issue 45 million more on January 4, 2027. This total payout would leave sellers holding about 13.8% of the company's post-issuance shares. The deferred shares have a six-month lockup from July 2, with half potentially locked for another six months if the 30-session volume-weighted average price before January 2 exceeds $20, roughly 184% above Wednesday's close.
The 85 million shares were valued at about $599 million at $7.05, approximately $76 million less than the reported $675.5 million stock portion. The total deal value is $875.8 million, or about 4.6 times DZYNE's projected 2026 revenue of $191 million. Ondas CEO Eric Brock stated that DZYNE "significantly strengthens Ondas' financial profile," while Highlander Partners CEO Jeff Hull noted that taking mainly equity made sense "because we believe in the long-term value of the combined platform."
Ondas was not alone in its decline on Wednesday. Red Cat Holdings Inc. (NASDAQ:RCAT) dropped 6.3%, and AeroVironment Inc. (NASDAQ:AVAV) slipped 1.6%, but Ondas saw heavier trading. Peer stocks are also down, making it difficult to attribute Ondas' fall solely to seller pressure. However, the resale setup means more Ondas shares can hit the market as volume grows, which is unusual for typical takeover lock-ups.
The overhang may not be completely resolved. The ceiling is based on potential sales, not actual ones, and another 45 million shares are set for January, which will increase the share count by about 7.3%. Ondas also needs to integrate DZYNE and other recent acquisitions while aiming for its higher 2026 revenue target of at least $525 million.
Investors are watching Thursday's volume and price action. If the stock stabilizes and trading slows, it could indicate that the supply has been absorbed. However, if the stock remains weak, it suggests selling may not be finished.
