Betting on Defense Drones: U.S. Small Caps Expanding Through Acquisitions

US-listed Nasdaq company Ondas Inc. (ONDS) has entered into a merger agreement with its subsidiary to acquire Mistral, a major prime contractor for the U.S. Department of Defense. This transaction secures Ondas prime-contractor status—enabling direct participation in U.S. Army and Special Operations Forces contracts—and supports broadening its domestic manufacturing, integration, and federal-procurement capabilities.

Ondas intends to combine its autonomous aerial and ground platforms and drone-countermeasure technologies with Mistral’s involvement in defense and public-safety contracts exceeding $1 billion, thereby expanding its footprint in long-term DoD programs and federal, state and local public-safety markets. Simultaneously, it has closed its acquisition of UK-based unmanned-aircraft propulsion specialist Rotron Aerospace, bolstering its presence within the UK and NATO defense ecosystems.

For Q4 2025, Ondas reported revenue of approximately $30 million and full-year revenue of about $50 million, both above prior guidance, although net losses and adjusted EBITDA deficits persisted. The company reaffirmed its 2026 revenue outlook of $170–180 million (roughly KRW 200–230 billion) and disclosed pro forma cash and cash equivalents exceeding $1.5 billion (approximately KRW 2 trillion) as of year-end 2025.

Ondas recently agreed to acquire stratospheric-platform innovator World View for about $150 million (around KRW 200 billion), with the deal expected to close in Q2 2026.

A conference call is scheduled for March 25 to review finalized 2025 results and provide further guidance on the impacts of the Rotron, Mistral and World View acquisitions. Following the Mistral merger announcement, U.S. brokerages including Stifel have maintained buy ratings on Ondas with an $18 price target.

Ondas is classified as a U.S. defense and communications-technology company. Its subsidiary, Ondas Autonomous Systems, supplies autonomous drones, unmanned ground vehicles and drone-interception solutions, while Ondas Networks offers private wireless communication systems for industrial and public-safety applications.

In the wake of the Ukraine conflict, demand from the U.S. and NATO for long-endurance unmanned aerial vehicles and drone-interception systems has surged, prompting Ondas and peers to accelerate technology development and M&A activity to secure defense-program participation and capture market share.