Shares of Red Cat Holdings Inc. (NASDAQ:RCAT) dropped 18.4% on Monday after the drone technology company revealed plans to raise nearly $47 million through a direct offering of its common stock.
According to the announcement, Red Cat has entered into agreements with institutional investors to sell 6,448,276 shares. The transaction, expected to close around June 18, 2025, remains subject to standard closing conditions.
The proceeds will be used to support general business operations and working capital needs, including funding activities tied to Red Cat’s new unmanned surface vessel (USV) division. The company noted this expansion is part of a broader push to diversify its presence in the unmanned systems sector.
Northland Capital Markets is acting as the sole placement agent for the offering.
Red Cat develops integrated hardware and software solutions for military, government, and commercial use, with its latest initiative extending the company’s capabilities beyond aerial drones into maritime applications.
The steep decline in share price reflects investor caution, as equity offerings often result in ownership dilution and short-term pressure on stock valuations. Despite the drop, the capital raise could provide Red Cat with greater flexibility as it scales operations in an evolving defense and robotics landscape.