The share of the drone defense specialist DroneShield is in focus. Recently she was under massive selling pressure.
• DroneShield stock has plunged over the past month
• The selling wave was triggered by insider sales and governance problems
• Analysts see a theoretical upside potential of over 200 percent
Conflicting forces determine the trend on Monday
The trend of DroneShield shares on Monday is likely to be characterized by acute uncertainty. There are fundamental doubts about the company’s management and the high short pressure on the one hand and the extreme value potential and a possible “buy-the-dip” effect on the other.
Factors for a negative trend
The main reason for a potential negative trend is the lack of confidence triggered by the sales of shares worth A$70 million by CEO Oleg Vornik and Chairman Peter James. In addition, the governance questions surrounding the departure of the US boss and the incorrect contract notification are unresolved. Since the investor conference planned for Friday was canceled at short notice, there is no new reassuring information before Monday trading. The sharp increase in short positions (up 62 percent in two weeks) could also lead to further downward pressure as short sellers could defend or expand their positions, Reuters reports.
Factors for a positive trend
On the other hand, the massive share price drop of 62 percent in the last four weeks could attract risk-taking investors. The shares closed at A$1.715 in Sydney on Friday, down over 9 percent. According to data from TipRanks, analysts see the average price target at AUD 5.15, which corresponds to a theoretical upside potential of around 200.3 percent. This extreme delta between the current price and professional price targets could lead to a countermove on Monday as investors view the stock as oversold.
How the paper will ultimately move on Monday remains to be seen. The stock is likely to either initially continue its downward trend, driven by the unresolved governance issues and short positions, or experience a sharp backlash as investors see the stock as a buying opportunity due to the low price and high target potential.
Editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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