Ondas Inc (NASDAQ:ONDS) experienced a sharp decline on Wednesday, with shares dropping 9.96% to close at $7.68, after touching an intraday low of $7.64. The stock recovered slightly in premarket trading to $7.98 ahead of Thursday's Nasdaq open. The selloff came as the company filed a prospectus on June 22 to register 3.13 million shares for resale by sellers tied to its Omnisys acquisition, with no proceeds going to Ondas itself.
The resale registration adds to a supply overhang that has weighed on the stock, even as the company reported robust order activity. Ondas disclosed that June orders for autonomous defense systems have topped $40 million, pushing total second-quarter orders to over $150 million. CEO Eric Brock emphasized that "Counter-UAS has become an urgent priority" as governments worldwide intensify efforts to counter drone threats.
Beyond the order news, Ondas' Sentrycs unit announced it will integrate its Cyber-over-RF technology into Lockheed Martin's (NYSE:LMT) Sanctum Counter-UAS system. Matt Bahnemann, a senior manager at Lockheed Martin, described Sanctum as a "modular, open Counter-UAS architecture," highlighting the strategic value of the collaboration.
The company is also scaling up through acquisitions. On June 18, Ondas announced plans to acquire Cyberhawk in a deal valued at approximately $125 million, with about 95% to be paid in cash. Cyberhawk's leaders have committed to investing roughly $5 million in Ondas stock under a one-year lock-up. Ondas expects Cyberhawk to generate over $45 million in revenue for the year ending March 2027 and reported a backlog of $95 million.
The supply overhang is not new. Ondas has issued 16.8 million shares from May 21 through June 22 for the Omnisys acquisition, representing about 3.2% of the 523.4 million shares outstanding. The Omnisys deal was valued at $196.6 million, all paid in stock, with $29 million at closing, $142.5 million in five installments, and the remainder due 24 days after closing. Resale plans now include 3,126,979 shares, mostly from Omnisys holders, with selling capped at 15% of the 10-day average daily volume; World View holders are limited to 5% of the previous day's volume.
Insider activity has also contributed to pressure. On June 2, a Form 4 filing showed that CEO Eric Brock received 4.5 million shares from RSU vesting and sold 2.38 million shares at $13.43 to cover potential taxes. After these transactions, he directly held 3.58 million shares and another 1.15 million through Privet Ventures LLC.
Despite the near-term headwinds, Wall Street remains optimistic. Google Finance data shows seven Buy ratings, no Holds or Sells, with an average price target of $20.14. Needham's Austin Bohlig reiterated a Buy and a $23 target on June 22, aligning with the latest resale filing and order update. Average daily trading volume stands at 78.6 million shares, and the recent resale block represents about 4% of that volume. However, with additional Omnisys stock payments pending, the supply overhang may persist. Shares are currently trading near half their 52-week high of $15.28.
