Zenatech’s Defense Pivot Fuels Share Rally as Short Sellers Circle

Zenatech rallies 15% in seven days, driven by defense sector expansion and a strategic stake in cybersecurity firm Route1, as it targets US government contracts.

Zenatech’s stock has clawed back ground in a volatile week, driven by the company’s aggressive push into the defense sector and a strategic investment in cybersecurity. The shares rose 8.85% on Friday to close at €2.09, extending a seven-day winning streak that has delivered gains of roughly 15%. The momentum carried into Monday, with the stock climbing nearly 10% to €2.11, pulling it further away from its recent low of €1.69.

The rally comes as Zenatech deepens its ties to the military-industrial complex. The company has acquired a 12% stake in Route1, a cybersecurity specialist, through the purchase of 937,477 common shares. The move is designed to secure encrypted communications for autonomous flight systems, a critical component of Zenatech’s expanding ecosystem of AI-driven drones and software services.

This pivot toward defense is reshaping the business model. In the last fiscal year, total revenue climbed to $12.9 million, with the “Drone-as-a-Service” segment contributing $10.1 million. The balance sheet has swelled to nearly $100 million, fueled by a series of acquisitions. Zenatech is now developing prototypes for interceptor drones, including the P-1 Interceptor, and building test facilities in Ukraine for real-world countermeasure trials.

The company is also gearing up for a make-or-break appearance at the Xponential trade show in Detroit at the end of May. There, it will showcase integrated drone hardware and its Drone-as-a-Service model, while seeking to validate its AI platforms through field tests and meetings with government officials. Simultaneously, Zenatech is optimizing production at its Mesa, Arizona facility to meet US and NATO standards, aiming for the coveted Blue-UAS certification—a prerequisite for federal procurement contracts.

Despite the recent uptick, the stock remains roughly 20% in the red year-to-date and trades more than 60% below its 52-week high of €5.80. The net loss reported in the last fiscal year was largely attributed to non-cash items, with around $22 million tied to adjustments on derivative instruments linked to convertible bonds used for expansion.

Short sellers have not been deterred. Bearish bets increased by 15.4% in April, reflecting deep skepticism about the company’s trajectory. Analysts, however, see significant upside. The average price target stands at $7.14, with some forecasts reaching as high as $9.00 if the defense expansion gains traction. The coming weeks will be decisive: securing the Green-UAS certification could unlock lucrative US government contracts, while the Detroit conference will serve as a critical test of Zenatech’s ability to convert its technological ambitions into tangible pilot programs.