Why are DroneShield shares flying 16% higher on Tuesday?

DroneShield Ltd (ASX: DRO) shares are soaring today.

Shares in the S&P/ASX 200 Index (ASX: XJO) drone defence company closed yesterday trading for $1.745. In morning trade on Tuesday, shares flew to $2.030 each, up 16.3%. After some likely profit-taking, shares are changing hands for $1.945 in late morning trade, up 11.5%.

For some context, the ASX 200 is up 0.1% at this same time.

So, why are DroneShield shares leaving the benchmark in the dust today?

What’s behind the surging DroneShield shares?

In an announcement this morning labelled non-price sensitive, the ASX 200 defence stock reported that it has received a follow-on contract for $5.2 million.

While the value of the contract, for handheld counter-drone systems and associated accessories, isn’t huge, it nonetheless looks to be reassuring rattled investors who today are piling back into DroneShield shares.

The company noted that the contract comes from an in-country European reseller, that is contractually required to distribute the products to a European military customer.

Management said that DroneShield has all the required stock ready to go to deliver the order. The company expects to receive a cash payment before the end of the year, with no additional material conditions needing to be satisfied.

The company said:

The reseller is a vetted counterparty that DroneShield has worked with for three years. Over this period, and excluding the contract announced today, DroneShield has received 12 contracts from this reseller totalling over $70 million.

A welcome respite from the record high retreat

If you’ve been following the company, you’re likely aware that DroneShield shares hit an all-time closing high of $6.50 each on 9 October.

At that stage, shares in the ASX 200 defence stock were up an eye-popping 780% since 2 January.

Following that kind of meteoric rise, it doesn’t take much for investors to start taking some profits off the table.

Unfortunately, a number of reasons arose over the past weeks that saw shares go into a tailspin.

Those concerns included withdrawn ASX announcements relating to United States military contracts that were marked and reported to investors as new contracts rather than revised contracts.

ASX 200 investors also look to have been selling amid media speculations that the company’s products could be impacted by more basic drones using fibre optic technology. Speculations that DroneShield dismissed as inaccurate in an update on Monday.

And the biggest one-day hit came on 13 November.

DroneShield shares plunged 31.4% after investors learned that CEO Oleg Vornik had sold $49.47 million shares in the company, joining several other directors who also sold material holdings.

While still well off the record highs, it’s worth noting that shares in the ASX 200 drone defence company remain up 153% in 2025.

The post Why are DroneShield shares flying 16% higher on Tuesday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.