40% of Wall Street Is Betting Against This Little-Known Defense Stock. Here's Why They Might Be Wrong.

Ondas (ONDS) just acquired Cyberhawk, a drone inspection company that uses AI to check critical infrastructure like power lines and pipelines. The deal cost about $125 million, mostly in cash, and ONDS stock rose roughly 4% after the news. It’s the latest in a long run of purchases that has reshaped Ondas from a small drone maker into a much bigger defense and infrastructure business. In the past month, the stock price has increased 29%, and many are now betting against the company. 

ONDS currently has a massive short interest of around 40%. That is an unusually large bet that the stock will fall. What’s worth understanding is why. The demand is solid, and the bet against the company is primarily about two other things.

What the Shorts Are Really Betting on

The first is dilution. Ondas has paid for its shopping spree largely by issuing stock and raising money through share sales, including a roughly $1 billion equity offering. Every new deal risks adding more shares, which reduces the value of shares for the company’s existing shareholders. The second is conversion. Ondas is sitting on a backlog of more than $450 million in orders, but it has been slow to turn that backlog into actual revenue. The bears are betting the gap between the promise and delivery stays wide. 

Here’s why I believe the bulls have just as strong a case, if not stronger. The company pulled in over $150 million of orders in the second quarter. Defense giant Lockheed Martin (LMT) is incorporating Ondas technology into one of its own systems. Moreover, management has raised its 2026 revenue target to at least $525 million. The business is bigger and more validated than it has ever been, yet ODNS stock trades at about 9.9x sales, roughly a third of its 5-year average. For a company whose fundamentals have been improving, that is a considerable discount. CEO Eric Brock said the focus now is on “efficiently converting that backlog into customer deliveries, revenue growth and cash flow generation.” Its earnings on Aug. 13 are the next test of exactly that. A strong showing would put real pressure on the 40% of the float betting the other way. 

About Ondas Stock 

Ondas provides drone, private wireless, and automated data solutions in the United States and internationally. It operates through the Ondas Networks and Ondas Autonomous Systems segments. The company provides secure wireless networks for industrial applications and offers commercial drone platforms used for surveillance, monitoring, and data collection. It serves customers across industries that require reliable connectivity and autonomous technologies. Founded in 2014, the company is headquartered in West Palm Beach, Florida. 

Over the last 12 months, ONDS stock has increased nearly 173%, easily outperforming the iShares US Aerospace & Defence ETF (ITA), which rose approximately 29% during the same period. The rise has been driven primarily by the growing demand for counter-UAS systems and defense robotics amid rising global security concerns. However, the biggest catalyst for the company’s transition from a small, early-stage company to a rapidly growing defense technology platform was its 2025 revenue of $50.7 million, up about 605% year-over-year (YoY).

Ondas looks reasonably valued for a company growing this fast. The forward GAAP price-to-earnings (P/E) of 18.72x is modest for a defense and autonomous systems firm scaling revenue at this pace, though there’s no multi-year average to compare it against. As I mentioned earlier, the forward price-to-sales (P/S) ratio of 9.88x indicates a considerable discount to its historical norms, trading about 65% below its 5-year average of 27.92x. In other words, the market is valuing the company more cheaply even as its fundamentals improve. The EPS outlook is currently unclear, though estimates do point to strong growth once the acquisitions are absorbed.

Its balance sheet is one of the strongest aspects. Ondas holds $1.47 billion in cash against just $17 million in debt, leaving it comfortably net cash positive. That is what answers the dilution worry hanging over the stock. The company has already raised the money it needs to fund its expansion, which means it can keep growing without leaning on shareholders every few months. For investors, the appeal is a fast-growing business with a clean balance sheet that is trading at a significant discount to its own history. 

Ondas Bets on $457 Million Backlog to Fuel Growth

Ondas reported its first-quarter earnings on May 13 and is set to announce its second-quarter earnings on Aug. 13. The company reported impressive financial results for the first quarter, significantly exceeding market expectations. It reported revenue of $50.1 million, a tenfold increase YoY. The earnings per share came in at $0.81, comfortably beating the Wall Street consensus of $0.0525. ONDS’s gross margin was 49%, up from 35% in Q1 2025 and 42% in Q4 2025. 

Looking forward, the company said it is increasing its 2026 revenue target to at least $390 million. The company’s strategic initiatives, including its partnership with Palantir (PLTR) and the ONBERG joint venture, are expected to drive further expansion and innovation. Ondas aims to exceed 50% gross margins in the coming quarters, with a long-term target of reaching 60%. Needham analyst asked about backlog conversion and the nearly $1 billion contract, to which CEO Brock stated that the program is well-funded and could lead to additional orders in the future. However, the company has taken a conservative approach in its forecasts. 

What Do Analysts Expect for ONDS Stock?

On Aug. 11, Roth Capital analyst Scott Searle initiated coverage of ONDS with a “Buy” rating. The analyst also assigned a price target of $13. Searle believes Ondas has evolved into a diversified defense technology company through 14 acquisitions. Moreover, he believes the company is well positioned to capitalize on a market opportunity exceeding $100 billion. 

Based on nine Wall Street analysts covering the stock, ONDS stock holds a consensus “Strong Buy” rating. Out of those, seven have a “Strong Buy” rating, one has a “Moderate Buy” rating, and one has a “Hold” rating. The stock’s mean price target of $18.61 reflects an impressive 99.89% upside from current levels.