Red Cat (RCAT 13.98%) stock is seeing massive gains in Thursday's trading. The company's share price was up 35.1% as of 2:20 p.m. ET. The S&P 500 was up 0.5% at the same point in the day's trading, and the Nasdaq Composite was up 0.8%.
The company's valuation is surging in conjunction with a recent report suggesting that the U.S. government could be poised to invest in drone companies. With today's explosive pop, the stock is now up 81.5% in 2026.
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Red Cat surges on U.S. drone investment report
The Wall Street Journal published a report yesterday suggesting that the U.S. government was looking at plans to provide funding to U.S.-based drone technology companies in the defense industry through direct investments. According to the report, the Pentagon is looking at Unusual Machines, Neros Technologies, and Performance Drone Works as potential candidates for funding and investment.
NASDAQ: RCAT
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What's next for Red Cat?
While Red Cat wasn't directly named as a prospective funding recipient, news that the U.S. is aiming to bolster domestic drone capabilities is a bullish indicator for the company. Red Cat is a provider of intelligence, surveillance, and reconnaissance (ISR) drone technologies that is now headquartered in Utah after relocating from Puerto Rico, and it could see positive tailwinds from U.S. investments in drone tech through tech licensing and overall industry valuation momentum, even if it doesn't directly receive funding. It's also still possible that the company could receive direct U.S. funding and new government contracts connected to partnerships aimed at bolstering drone tech.
