After a year of consistent decline in the share price, Drone USA Inc (OTCMKTS:DRUS) has finally seen a reversal in this trend. Investors in the firm have over the past year suffered massive capital losses as the share price dipped from its starting value of $.15 as at February 2018 to lows of $.0005. Its price hit a most recent low of $.0011 earlier last week as shown in the chart below:
As earlier stated, this changed this week as the firm’s trajectory changed and its price moved towards the green zone. The last five days have thus witnessed a 45.45% increment in the firm’s share price, having risen from $.0011 to $.0016. Furthermore, over 275 million shares have been traded during this period, a factor which has led us to conclude that the momentum associated with this stock has been felt widely by market players. We, therefore, opted to take a look at the stock and establish the catalyst driving the above movement.
Before this, however, let us have a brief look at the history of DRUS.
History of DRUS
The firm is broadly classified as a technology company operating within the unmanned aerial vehicles (UAV) segment. Its focus is on both the integration and distribution of advanced UAV systems and services, providing procurement, distribution and other logistical services. Moreover, they also offer drone operator training and licensed piloted services in addition to supplying spare and replacement parts to different federal and military agencies.
Through this broad strategy pegged on their core product, the firm has been able to diversify their market segment as they currently offer real estate marketing, construction, and engineering, search and rescue among other services. Each of the above has been pivotal to ensuring that the firm’s growth trajectory is constantly on the rise.
Over the past month, there has been little activity within the firm with most of the activity having taken place last year. Let us have a closer look at this activity.
Winning Government Contracts
As previously stated, Drone USA resells drones, insulation jackets, and other products to the United States government. Over the December 2018 period, the company was aggressive at seeking different contracts in a bid to ensure that their revenues rose over the course of 2019 and this was finally achieved.
Towards the end of the year; the firm, through their subsidiary, Howco Distributing, announced that they had received contracts worth $1.6 million to distribute material to the government. As is the case with such transactions, the bearing of this on the revenue of the firm and thus its valuation is very positive.
The firm further announced that they were exploring new ways and more efficient ways of packaging their products so as to lower costs. Here, a secondary packaging option was being sought, one which would see them lower costs akin to packaging their goods for the midwest and eastern supplier products. Through this, the firm further expects their valuation to rise, driven by the higher expected profits.
In his statement, DRUS CEO spoke to the above revenue growth and cost-cutting being key on their future outlook. He was quoted stating:
“We are continuously exploring different ways to increase our sales with the U.S. government. When visiting Ohio, we paid a visit to a well-established and capable packing company that can help us more efficiently and at a lower cost package…”
Using the above, it is expected that DRUS will benefit from the increase in value associated especially with higher revenues and consequently with higher profits. With the firm eyeing growth, the current strategy forms a strong pedestal on which they can actualize this vision.
In order to implement this vision, the firm needed a star to assist in fostering growth as well as shaping market outlook and expectations. That star is Jeff Garon.
Jeff Garon has garnered over 30 years of experience in strategic development and execution with an incline towards financial strategy. He has vast experience is all walks of finance, be it start-ups, turnarounds, acquisitions, reverse mergers and so on as well as assisted firms such as Etelos, Mota Group, CVA Partners, Silicon Storage Technology, Tripath Technology, and Oracle to implement their strategies.
Using his experience, DRUS expects him to assist the firm work up towards an uplisting which forms the first phase of their growth strategy. As a result, the firm not only appointed him as the company Chief Financial Officer but also appointed him to the Board of Directors so as to ensure his advice on company strategy would be taken up at the corporate highest level.
With the above two implemented, it is clear that DRUS is working not only towards growing their revenues and solidifying their bottom lines but also receiving the best advice on financial strategy. Upon these two taking shape, it won’t be long before their performance and valuation are on the rise. We thus remain bullish about the stock.
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Disclosure: We have no position in DRUS and have not been compensated for this article.
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