Delta Drone: A Little Known Commercial Drone Stock
When thinking about drones as an investment theme, we can really divide them into 3 classifications; commercial, consumer, and defense. While there is some overlap between all three classifications, each represents a different investment profile. Defense spending will have a strong impact on the growth of defense drones. Consumer discretionary spending will have an impact on consumer drones. If the economy is doing well, people are more likely to buy expensive toys. Commercial drones, on the other hand, will be driven by the discovery of new applications for drones in a variety of different industries.
Opportunities for retail investors in the drone space are limited. We’ve talked before about a pure play stock for military drones. We also discussed a potential play on consumer drones with Parrot. We also looked at a few companies that claim to be drone stocks but aren’t. In this article, we’ll take a look at a little known publicly traded French company that is a pure play on commercial drones.
Founded in 2011, Delta Drone is a leading French company in the enterprise drone space offering a complete drone solution which targets mining, agriculture, and industrial inspection with more than 300 active customers. The company trades on the Euronext Paris exchange (EPA:ALDR) with a current market cap of around $37 million. ALDR first began trading in July of 2013 and since then, has lost around -56% of its value having lost -31% in the past year alone. ALDR’s basic financial results for 2014 and the first half of 2015 can be seen in the below table (in euros):
ALDR expects to close another 650K in the second half of 2015 which would bring sales revenues up from 2014, but not by that much. They recently acquired a 50% ownership of a company in South Africa that surveys mines and also opened offices in the U.S. as well including the establishment of a drone investment company in San Francisco called DDrone which will make investments in promising drone startups.
The company is unique in that they aren’t just selling drones but rather selling solutions. When a client requests a drone to inspect a cellular tower, for example, Delta Drone will provide the drone, a professionally trained drone pilot, and the resulting dataset stored in the cloud. This full-service offering ensures that the client doesn’t have to worry about all the legalities surrounding flying a drone, the upfront cost of purchasing an expensive drone and maintaining it, or having an inexperienced operator crash the drone. The two types of commercial drones that Delta manufactures and uses can be seen below:
While Delta Drone seems to be on the right path with their international expansion and intent to grow through acquisition, they’re still burning through a fair amount of cash relative to their revenues. In their latest financial press release, they mention the availability of an additional 30 million euros of funding that they have access to. We’d really like to see total revenues show some strong signs of growth as their 2014 revenues would need to double just to cover expenses and allow them to operate without having to raise additional funding. Nonetheless, it’s an interesting little drone stock to keep an eye on.
U.S. investors who want to invest in Delta Drone (EPA:ALDR) will need to sign up for an Interactive Brokers trading account.
Most people don't know that Interactive Brokers is the biggest online brokerage firm in the U.S. and the only firm we know of that allows you to buy stocks directly on 125 different foreign stock exchanges. We've used IB for many years as a cheap platform to exchange currency, for trading stocks on foreign exchanges, and for trading shares in U.S. stocks. Click this link to get started.