Thoughts on DroneShield (DRO)
What is your thinking on the short selling on this stock - does that keep happening, or will it settle down? With this happening, do you recommend selling?
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Answer
Hi Trish,
A reminder that advice is general in nature, and does not take into consideration and one person’s circumstances, noting DRO is a very volatile, high-risk proposition.
We were asked another question at the start of the month on DRO, a common occurrence when volatility surges in stocks. At the time the subscriber was talking around when/where to take profit when stocks surge higher and we alluded to slowly scaling out of a position which has rallied three-fold over 12-months while maintaining a position for potential future gains.
However, DRO has now corrected over 40% in just a few days, changing the angle of both question and answer.
- DRO has a short position of well under 1%, unlike Pilbara (PLS) at ~21% hence “shorters” should not be blamed for the aggressive pullback.
The drone detection company pointed to a media report on its recent share rally as the potential reason for the drop. The company mentioned a Capital Brief report with commentary from 2 fund managers who thought the shares price was overheated, they might think its a buy now!
We are neutral DRO ~$1.75 expecting it to “take a rest” after recent volatile swings but that’s a relative comment with regular 5-10% swings likely.
