{ "docId": "019dd923-622c-750b-8b98-405eb4149c5a", "docSlug": "d9c5fbbb51d2", "documentTitle": "Red Cat Holdings, Inc. (RCAT)", "authorId": "53_Kerrisdale_Capital", "authorName": "Kerrisdale Capital", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2025-01-09 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 24, "pageCount": 29, "prevPage": 23, "nextPage": 25, "slideType": "villain_critique", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 6, "notes": "The slide uses a narrative-driven critique style to undermine the credibility of the company's management and their revenue projections.", "elementsJson": [ "paragraph", "quote_block" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-405eb4149c5a/24", "deckHref": "/decks/019dd923-622c-750b-8b98-405eb4149c5a", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-405eb4149c5a.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-405eb4149c5a#slide-24", "components": [ { "bbox": null, "kind": "callout", "text": "The idea that there's some vast market for $15,000 - $20,000 drones anywhere outside the SRR program is a mirage.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-3f41-721f-9e46-2bd45393e6fe", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.66, "x": 0.17, "y": 0.52 }, "kind": "paragraph", "text": "Regarding the FPV drone, we’ll only note that this product doesn’t currently exist. The Red Cat website that showcases the Arachnid family of products shows the Fang FPV drone as “under development and undergoing Blue UAS certification.”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "39fbd8b9-f905-48cb-8ab6-b79e5d59b9ef", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.66, "x": 0.17, "y": 0.85 }, "kind": "paragraph", "text": "When do you think the FlightWave factor will be up and running? That’s a good question. So we are just starting to move in now. We just signed a lease. We hope to have more of a start-up style factory in about 3 or 4 weeks where basically, they’re", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "961e6384-454f-4beb-a6da-1157b7bad1e6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.66, "x": 0.17, "y": 0.43 }, "kind": "paragraph", "text": "Going back to Red Cat’s $50-55 million revenue guidance for 2025 (excluding the SRR), Red Cat explained in their late September earnings call that this is comprised of $5-8 million in revenue from their FPV drone, and the rest they expect to be evenly split between the Teal-3 (the Teal-2 successor) and the Edge 130.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "963f0cca-9b2e-49d7-bf64-ba1188232973", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.2, "x": 0.17, "y": 0.38 }, "kind": "paragraph", "text": "About that Guidance", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c453e056-cf00-4306-b4dd-ed1defa2feef", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.66, "x": 0.17, "y": 0.16 }, "kind": "paragraph", "text": "It's frankly just comical. In March of 2022, Thompson was talking about selling every possible drone Red Cat can make to European customers for Ukraine. 3500 drones in proposals in September of 2022. “Expecting significant sale” with European customers in 2023.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c5e014e0-5921-45b4-b912-5c557bc70df6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.66, "x": 0.17, "y": 0.09 }, "kind": "paragraph", "text": "August 8th, 2024: Red Cat is also in late stages for NATO programs of record. We believe that they are also significantly larger than the U.S. SRR program of record. These programs are expected in the next 2 months to have their down selection.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "cde66fad-f8eb-47d0-9e22-fd88bf636926", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.66, "x": 0.17, "y": 0.68 }, "kind": "paragraph", "text": "The Edge 130 guidance – which comes out to something along the lines of $20-25 million in revenue – is more significant and a bit perplexing. The Edge 130 is a drone developed by FlightWave Aerospace Systems in 2019.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e4547a20-1a23-497b-915f-c1a3b9e156d6", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "When do you think the FlightWave factor will be up and running? That's a good question. So we are just starting to move in now. We just signed a lease. We hope to have more of a start-up style factory in about 3 or 4 weeks where basically, they're — Thompson (CEO) on December earnings call.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-3f41-721f-9e46-2f4b55f0861e", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "05d694ec-6764-485c-b659-a2d4bce4bb41", "evidence": "Systematic debunking of company claims regarding product existence and manufacturing readiness.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }