Why Ondas Stock Is Sinking Today
Key Points
Ondas posted huge sales growth in Q2, but its loss came in higher than expected.
The company increased its full-year sales guidance.
Ondas's big sales beat in the second quarter could be more important than its earnings miss.
- 10 stocks we like better than Ondas ›
Ondas (NASDAQ: ONDS) stock is losing ground in Thursday's trading following the company's second-quarter report. The drone specialist's share price was down 6.2% as of 10:40 a.m. ET. The stock had been down as much as 10% earlier in trading.
Ondas released its Q2 results before the market opened this morning and posted mixed results. With today's post-earnings pullback, the stock is now down roughly 6% year to date.
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Investors aren't giving Ondas credit for huge sales growth in Q2
Ondas's revenue increased 1,236% year over year in the second quarter to reach $83.8 million, topping the average analyst estimate by $15.8 million. On the other hand, the company's loss of $0.19 per share came in $0.09 per share higher than the average analyst target. While the company's net loss of $89.7 million in the quarter represented a huge jump over the $10.8 million loss it posted in the prior-year period, it's not surprising to see the company's losses expand as it scales its business at this stage.
What's next for Ondas?
Because Ondas is at a relatively early stage of scaling its drone tech operations, it's not surprising that its big sales beat also arrived with a wider-than-expected loss. With that in mind, I don't think investors should worry about the earnings miss in Q2. Investors may also be concerned about potential competition from Ukrainian drones, but Ondas's second-quarter results looked very solid.
Additionally, the company now expects full-year sales to be between $525 million and $550 million -- up dramatically from its previous target for sales of at least $390 million. Ondas also said that it expects non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) margin improvement in the current quarter, operating platform profitability in Q4, and overall adjusted EBITDA profits in the fourth quarter of next year. On balance, the company's recent quarterly report looked strong -- and the pullback for the stock today could be a buying opportunity.
Should you buy stock in Ondas right now?
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ondas. The Motley Fool has a disclosure policy.
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