The Drone Market Update: Attack Drones Get a Price Tag, a Navy Drone Boat Report Gets Pushback, and Drone Stocks Slide Anyway
The Pentagon's next drone competition puts a price tag on the attack drone: $3,000 for a close-quarters model and $5,000 for a deep-strike one, before munitions, with about 60,000 sought for $450 million, DroneLife reported October 14. The Army made ten companies eligible for counter-drone orders, seven of them under contracts with base values of $500 million each. Bloomberg reported that the Navy stopped pursuing further purchases of a drone boat and was weighing cheaper alternatives, a report the builder strongly disputes. Our read: drones are starting to be bought like ammunition, at set prices and set volumes, and the question is who can build them at those prices and still make money. Most drone stocks fell anyway, even as suppliers announced new orders. This issue covers September 19 through October 23.
The Month in Numbers
The Pentagon Is Pricing Attack Drones Like Ammunition
Drone Dominance Phase III splits its initial target of about 60,000 attack drones evenly between deep-strike and close-quarters types, at $5,000 and $3,000 per drone before munitions and support equipment, according to DroneLife's October 14 report. At those prices the drones themselves come to about $240 million of the $450 million total, by our math. The solicitation closed October 12. Up to 14 companies are expected to advance to Gauntlet III, with testing expected in March 2027. Advancing does not guarantee a production award.
Price is only part of the test. Bidders must show they can deliver at least 8,000 drones in five months and meet tougher requirements for operating where communications and navigation are contested. Reliability, functionality and consistent manufacturing will help decide who wins orders.
Recent orders suggest the volume is already arriving. Neros announced on September 30 an order for 14,000 drones and explosive payloads valued at more than $100 million. XTEND announced on October 13 a $40.5 million order for 6,000 STRIKER systems, about $6,750 a system by our math. Next is Gauntlet 2.5, a competition for reusable bomber drones with 17 companies invited, now expected in early November at Camp Grayling, Michigan.
Set prices and orders by the thousand are how militaries buy ammunition: the customer names the capability it wants and the price it will pay. That favors builders who can scale up manufacturing. It may also squeeze margins for any supplier that can't bring costs down as production grows.
The Navy Reportedly Stopped Pursuing More Drone Boats, and the Builder Pushes Back
On October 20, Bloomberg reported that the Navy had stopped pursuing further purchases of the Global Autonomous Reconnaissance Craft (GARC), the drone boat built by Aevex's BlackSea unit, after an assessment found hardware and performance shortcomings. According to the report, the Navy was considering cheaper alternatives for some missions, including one-way attack drones. Reported Navy spending on 24 prototypes and 301 production craft came to about $136.8 million.
Aevex strongly disputes that orders were halted over performance. It said it delivered 325 boats in 2025 to fill the original order, that no further GARC purchases had been planned, and that the Navy is still funding upgrades and new mission packages. It also said contract changes during 2026 brought the total contract value to about $350 million and extended the work through June 2027. Those are the company's statements, and the two accounts have not been independently reconciled.
The bigger question is how the Navy weighs cost against capability, the same question a $3,000 attack drone puts to every more expensive system. A one-way drone is not a substitute for a reusable boat, but suppliers increasingly have to show when added endurance, payload and flexibility justify the higher price.
The Army Made Ten Counter-Drone Companies Eligible for Orders
If attack drones are becoming ammunition, the Army is shopping for the armor. On September 29, the Army's Joint Interagency Task Force 401 announced ten indefinite-delivery, indefinite-quantity (IDIQ) contracts under Domestic Shield, its framework for buying counter-drone capabilities. Seven carry stated base values of $500 million each: Allen Control Systems, Digital Force Technologies, DroneShield, Napatree Technology, RADA Technologies, SRC and L3Harris WESCAM. Echodyne and PVP Advanced EO Systems drew $250 million each, and SmartShooter $150 million. The work spans assisted rifle aiming, remote weapon stations, radar, and tracking and imaging systems.
An IDIQ contract makes a company eligible to compete for orders. It does not say when the Army will buy, or how much. Revenue arrives one task order at a time.
The threat keeps changing. After a suspected drone entered Lithuanian airspace on October 18, officials there called for changes to NATO's engagement procedures for when poor visibility limits visual identification. Bringing a drone down starts with detecting, tracking and identifying it, and each of those steps is part of the counter-drone market.
Washington and Beijing Both Changed the Rules on Drone Parts
Cheap at volume depends on dependable parts, and both capitals changed the rules this month. On October 13, an FCC rule took effect restricting new equipment authorizations for certain devices that contain logic-bearing components made by companies on the agency's Covered List (Holland & Knight). The rule looks forward: it generally does not invalidate equipment already authorized. DJI and Autel are among the companies named on the Covered List (DroneXL).
On October 19, China announced revisions to its export controls that take effect November 18 (CGTN, citing Xinhua). Specified drone autopilots, engines, aircraft and related technologies remain subject to export licensing. The revisions also clarify product thresholds and simplify procedures for some qualifying transactions. Calling this a blanket ban on Chinese drone parts would overstate it.
For U.S. builders, both rules favor supply chains that can meet procurement requirements without parts whose availability or regulatory status could change. The edge is not domestic sourcing for its own sake. It is dependable sourcing at a competitive price.
Drone Stocks Making Moves: New Orders Didn't Stop the Selling
From the September 18 close to the October 23 close, most of the drone stocks reviewed here fell sharply. Figures are price returns in each stock's trading currency, excluding dividends (Yahoo Finance). Unusual Machines (UMAC) fell 26.6%. Elsight (ASX: ELS) fell 43.1% in Australian dollars.
| Company | Ticker | Price return | Currency |
|---|---|---|---|
| Elsight | ASX: ELS | -43.1% | AUD |
| Red Cat | RCAT | -34.4% | USD |
| Aevex | AVEX | -33.1% | USD |
| Unusual Machines | UMAC | -26.6% | USD |
| AeroVironment | AVAV | -22.9% | USD |
| Kratos | KTOS | -18.5% | USD |
| DroneShield | ASX: DRO | -16.6% | AUD |
| Ondas Holdings | ONDS | -16.1% | USD |
| Palantir | PLTR | +10.8% | USD |
September 18 close to October 23 close. Price returns in each stock’s trading currency, excluding dividends. Source: Yahoo Finance.
Red Cat (RCAT) fell 34.4%. It offered €39 per share in cash for Austrian engine maker Steyr Motors, a 28.9% premium to Steyr's October 16 close. The offer needs acceptance of 50% plus one share and approvals in Austria, Italy, Australia and the UK, and the acceptance period is scheduled to end December 18.
Aevex (AVEX) fell 33.1%, including 32.5% on October 21, after the GARC report. It closed October 23 at $10.83, against a $20 IPO price.
AeroVironment (AVAV) fell 22.9%, Kratos (KTOS) 18.5% and DroneShield (ASX: DRO) 16.6% in Australian dollars.
Ondas Holdings (ONDS) fell 16.1%. It reported more than $165 million of orders from the second half of August through October 1, and more than $270 million since June 30. It also announced Regna AI, a private company powered by Palantir, without disclosing financial terms. Palantir (PLTR), not a pure-play drone maker, rose 10.8%.
No single event explains the selling. What the prices do show is investors separating a strong long-term demand outlook from the timing, economics and execution risk at each company.
The Bottom Line
The month's procurement news pointed one way: the government is spelling out what it wants from drones, from mission requirements and target prices to production capacity, and opening channels to buy counter-drone systems alongside them. Most public drone stocks did not follow. Our read: bigger budgets create the opportunity, the bar for winning it is rising, and execution will decide who captures it. Third-quarter earnings reports are the next test of how fast awards and order announcements turn into deliveries, revenue and cash flow. Also on the calendar: Gauntlet 2.5 in early November, Beijing's expanded limits on drone possession and storage from November 15, China's revised export controls on November 18, the end of the current federal continuing resolution on December 11, and the Steyr offer's acceptance deadline on December 18.
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