Unmanned aircrafts are coming—it’s just a question of when…
In the past few weeks, investors have seen electric vehicle and clean energy companies give a healthy return on their portfolios. However, those investors who took that risk and got in early are the ones who are really laughing. What did they do? They envisioned this change to the world before the rest of us.
Just imagine drones sweeping our streets with our Amazon deliveries, because this is soon to be a reality. Drones are becoming increasingly used in agriculture and in many other ways, such as in in China where they’re transporting people from place to place and even being used to tackle fires!
EHang Holdings, Ltd.
One exciting drone company to mention is EHang Holdings Ltd (EH $31.40), whose stock is up over 200% in three months. Founded in 2014, it’s a Chinese Drone maker which focuses on leading the autonomous aerial vehicle (AAV), and this company looks to be way ahead of its competitors. The company is partnered in drone delivery with DHL; however, the most remarkable part of the company is their EV ‘Drone Taxi’ which can transport two people autonomously from one place to another. This drone is called model 184. Its max speed is 130km/h with a range of 35km and is already being used in 40 cities in China. You might wonder if that battery range is enough, and that’s a viable point, although it is important to remember that battery technology is still developing and it’s possible that this range could be much greater in only a few years. The goals of the company are simple: to dominate the Chinese market and then go global. In a recent interview with Bloomberg on 12/01/2020, Richard Liu, chief financial officer of EHang, stated that the “European market is our important international market.” This opens huge growth opportunities for the company and to us investors. The fact that the company is so close to profitability already makes it a stock to consider going into the next few years and going global will be icing on the cake. In fact, Richard Liu says EHang should be profitable in 1 or 2 years. The EHang stock price has done very well over the last year and this shows us how the industry as a whole is gaining attention.
EHang could be compared to the car maker Nio in the sense that it is incentivized and backed by the Chinese government. For instance, the company opened a $6 million factory in 2020 whereby the local government contributed a large amount. Coincidence? I think not.
Regulations of drones, especially in the U.S, might slow down the growth of a company like EHang, and, although this is set up to disturb the Chinese skies, you might not see an EHang drone coming to Europe or the U.S. for a while. Despite this, it appears that EHang is winning the Chinese market with a reported increase in revenue, gross margin and gross profit year over year. In Q3 2020, total revenue reached $10.5 million, up 104.3% from 2019. With these results, it is forecasted that earnings could be positive in 2021! No doubt we should keep an eye on EHang.
If you aren’t so keen on EHang, another U.S. drone stock to consider is a company named Ageagle (UAVS $7.79). This company focuses on agricultural and delivery drones. Revenues for Ageagle increased significantly in Q3 from $42,000 in 2019 to $750,000 in 2020, and it is revealed that they work on behalf of a major e-commerce which has been rumored to be Amazon. The next earnings report is set to be in February 2021, and with their increasing partnerships and orders, it’s an exciting company to add to your watchlist. Furthermore, to add to the rumor, in November 2020 Amazon reportedly laid off dozens of employees working on its long-awaited drone project, signaling to investors that an Ageagle partnership may have something to do with it. The Ageagle stock price has popped nicely recently, thus showing interest around the up and coming companies in this sector.
Workhorse (WKHS $25.02) is another EV company with their ‘Horsefly’ drone focusing on drone delivery. The Horsefly takes the parcel out of a Workhorse C1000 EV truck and delivers it to the intended address. Then, once complete, pairs back up with the truck through its auto-landing feature acting as a landing spot on top of the truck where it can re-charge. Revenues for Workhorse increased significantly in Q3 from $4,000 in 2019 to $ 565,000 in 2020. That is over a 14,000% increase. This is definitely a company to watch. The Workhorse stock price has also had a rollercoaster ride, but is doing very well over the last 12 months.
Alpine 4 Technologies
Alpine 4 Technologies Ltd (ALPP $2.48) is a holding company which has recently entered the Commercial Drone Market With its Acquisitions of ‘Impossible Aerospace Corporation’ and ‘Vayu’. It is a penny stock that saw a 10x increase in its stock price over December 2020 with revenues for ALPP increased in Q3 from $7.08 million in 2019 to $8.72 million in 2020. The Impossible Aerospace Corporation is a company founded by Spencer Gore, a young former Tesla engineer who created the US-1 drone. The US-1 can fly for 1 hour, outperforming many drones in the market. It is primarily being used in responding to emergencies and supplying organizations with data and video. As for Vayu, this company has the X5 drone, capable of supplying medical products, helping in drone delivery, and reaching areas otherwise completely inaccessible. This drone can literally save lives.
In case you didn’t know, all of these U.S. drone stocks experienced a sharp rise in their share prices during December 2020 as Chinese drone maker ‘DJI’ became blacklisted by the US commerce department in the accusation of human rights abuse. This move threatened the global market of drones, especially for those which China dominates, but has led the U.S. drone market to start to explode as the drone age gets stronger. The Alpine 4 Technologies stock price has continued to increase and could see continued momentum higher as the industry grows.
At this moment in time, this a rare opportunity to be involved in an emerging market. Similar to electric vehicles, drone technology is getting more and more advanced. It is an industry that is making lives better and the world better and, for this reason, I would recommend checking out the companies mentioned here and other drone companies as I’m sure the competition will increase over time. My prediction is that drones will really start to take off… pardon the pun… from 2023 and, if you invest long-term, its risk to reward could be worth it. As you should all know, ‘Grow slow with Moe, and thank you for reading.’
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Thomas C Lin says
One of the best articles I read for stock analysis. Thank you.
Mrs. Moe says
Love hearing this, Thomas. Thanks for the feedback.