Institutional Investors Pile Into Ondas as Revenue Surges Tenfold but Profitability Remains Elusive

Q1 2026 revenue hits $50.1M, beating estimates; operating loss $42.7M. Backlog jumps to $457M. Vanguard, BlackRock increase stakes despite 34% short interest. Full-year guidance raised to $390M.

Few stocks tell a tale of two markets quite like Ondas Holdings. On one side, the specialist in private wireless networks and autonomous drone platforms has delivered a revenue explosion that blew past analyst estimates, prompting management to lift its full-year outlook. On the other, operating losses remain deep, short interest sits at a staggering 34%, and the path to group-level profitability stretches into 2028. To further muddy the waters, heavyweight institutional investors including Vanguard, BlackRock and J.P. Morgan have been aggressively adding to their positions, signalling conviction even as the company burns cash to fund its defense-sector expansion.

Revenue for the first quarter of 2026 hit $50.1 million – roughly ten times the year-ago figure and well ahead of the consensus estimate of $39.36 million. Gross margin improved sharply to 49% from 35%, driven by a more favourable product mix and greater efficiency in the core units. Yet the operating picture is far less rosy: the company reported an operating loss of $42.7 million and adjusted EBITDA of negative $10.9 million, though the latter came in better than expected.

The headline net profit of $361.2 million, compared with a loss a year earlier, is almost entirely a function of non-cash items – primarily a large valuation gain on convertible notes and a gain from deconsolidation. Strip those out, and Ondas is still running deep in the red. For context, the net margin in a recent prior period was negative 260%, underscoring just how much the expansion and acquisitions are costing.

That expansion is being fuelled by a rapidly swelling backlog. On a pro forma basis, backlog stood at $457 million as of the end of the first quarter, up from $68.3 million at the close of 2025. Acquisitions and new contracts are the main drivers: Mistral, acting as a US prime contractor, contributes roughly $264 million to the current backlog, while an IDIQ programme from the US Army with a potential value of $982 million provides a platform for follow-on orders – though those are not guaranteed. Additional contributions come from World View, Rotron Aerospace, the ONBERG joint venture with Heidelberg and the SkyWeaver partnership with Palantir.

After the strong start to the year, management raised its full-year 2026 revenue guidance to at least $390 million, up from an earlier internal plan. The second quarter is expected to see higher adjusted EBITDA losses as integration costs from the Mistral deal – valued at $175 million – pile up. The company's cash position stood at $2.78 per share, with a current ratio of 4.84, offering some cushion.

The institutional buying spree is impossible to ignore. Vanguard increased its stake by 39.9%, now holding roughly 18.8 million shares worth about $183 million. BlackRock owns more than 9.3 million shares, valued at $84 million, while J.P. Morgan holds nearly seven million shares. Cetera Investment Advisers also boosted its position. The presence of these blue-chip names lends credibility to the growth story, but it also raises the bar for management to convert revenue momentum into sustainable profits.

Meanwhile, the short-seller camp remains heavily active. With a short interest of 34% and options markets pricing in a post-earnings move of around 15%, the stock is clearly polarising. Analysts, however, remain largely constructive, with an average price target of $20.14 backed by buy ratings. The shares recently jumped 11.98% to €8.60 on Thursday following the results, after having traded at €7.88 earlier in the week. On a twelve-month view the stock has nearly decupled, but it remains well below the January high and is still down roughly 16% year to date.

The timeline to profitability is ambitious. Product-level adjusted EBITDA positivity is targeted for the third quarter of 2026, with the Ondas Autonomous Systems segment aiming to reach that milestone by the first quarter of 2027. On a consolidated basis, Ondas expects positive EBITDA no earlier than the first quarter of 2028.

Strategic bets on defence – including the Mistral integration and a $10 million mine-clearance contract won by subsidiary 4M Defense – give the company a clear growth runway. But until operating cash flow turns positive, the tug-of-war between institutional believers and short sellers is unlikely to let up.