DroneShield’s Record Backlog Does Little to Sway Bears With ASIC Probe and Hardware Reliance in Focus

Australian counter-drone firm DroneShield sees shares near 52-week low with 11.9% short interest, as regulatory probe and low recurring revenue offset a record $171M order backlog for 2026.

DroneShield has a pile of firm orders stretching into 2026 that would make most defence contractors envious, yet the Australian counter-drone specialist’s stock is trading closer to its 52-week low than its peak — and short sellers show no sign of letting up. The shares closed at €1.41 on Monday, a loss of just 0.25 per cent on the day but a decline of 5.19 per cent over the past week. Since the start of the year the stock has shed 28.91 per cent, and it now sits 61.34 per cent below the 52-week high of €3.65 reached in October 2025.

Short interest remains stubbornly high at 11.9 per cent, according to the latest weekly filing from the Australian Securities and Investments Commission dated July 13. That is only a marginal improvement from the 12 per cent recorded the prior week and the 12.5 per cent seen two weeks earlier. The total short position is valued at roughly 256 million Australian dollars, cementing DroneShield’s place among the most heavily shorted stocks on the Australian exchange, alongside names such as Domino’s Pizza Enterprises and Telix Pharmaceuticals.

Two distinct forces are driving the bearish conviction. On the regulatory front, ASIC has been investigating since late 2025 the timing of certain DroneShield corporate announcements and related insider stock sales. Details of the probe remain undisclosed, but the uncertainty has given short sellers a steady rationale to maintain their bets. The second factor is the nature of the company’s revenue. In the 2025 financial year, 91 per cent of sales came from hardware, with subscriptions contributing just 5 per cent and maintenance and service another 4 per cent. Even in the current order book for 2026, recurring revenue accounts for only 13 per cent of the total.

Those record orders are nonetheless impressive. As of May 26, DroneShield had booked 161 million Australian dollars in firm commitments for 2026, a 61 per cent increase year-over-year. A subsequent contract worth 24.9 million Australian dollars with the U.S. Joint Interagency Task Force 401 pushed the 2026 backlog to at least 171 million Australian dollars — equivalent to 79 per cent of total 2025 revenue.

The real prize, however, lies in a pipeline of 13 deals individually valued at over 20 million Australian dollars. The largest among them could reach 730 million Australian dollars, and management has promised an update in the second half of the year. Until a single one of these megadeals is signed, the stock remains a story of potential rather than substance — and each delay hands short sellers fresh ammunition.

Chief executive Angus Bean argues that customers want plug-and-play systems that secure airspace reliably, and Ray Fitzgerald, president of a U.S. defence firm, echoes the view that users demand large-scale deployable counter-drone technology. The company’s technology stack — radio-frequency detection, electronic warfare and command software — differs sharply from the approach of rival Electro Optic Systems, which secured a 5.7 million Australian dollar contract with the Australian government on July 8 for its Slinger system. Slinger combines a machine gun with laser-guided rockets. Electro Optic Systems’ market capitalisation of roughly 1.78 billion Australian dollars remains below DroneShield’s, though the gap has narrowed.

Chart technicians see little reason to step in. The stock is trading about 20 per cent below its 50-day moving average of €1.76 and roughly 28.7 per cent below the 200-day average of €1.98, a configuration often described as a “death cross.” The 14-day relative strength index sits near 38, suggesting the equity is oversold but without signalling a clear reversal. The annualised 30-day volatility hovers around 71 per cent, and the company’s total market capitalisation stands at approximately €1.3 billion.

Broader market jitters added to the pressure on Tuesday’s trading session. The S&P 500 fell 0.8 per cent on Monday on concerns over a potential U.S.-Iran confrontation near the Strait of Hormuz, while the Nasdaq 100 dropped 1.9 per cent and the Dow lost 0.3 per cent.

For DroneShield, the path out of this bearish rut likely runs through the signing of at least one of those large contracts in the pipeline. A deal would force short sellers to cover their positions, potentially sparking a sharp upward move. Until then, the combination of a regulatory cloud and a hardware-heavy business model gives the bears enough reason to stay put.