Ondas' Boosted 2026 Revenue Outlook Faces Scrutiny Amid DeepValue's Strong Sell Call

What happened

Ondas Holdings elevated its 2026 revenue forecast during an Investor Day presentation, attributing the improvement to a surging backlog, stronger 2025 results, and accelerating demand for its autonomy and counter-UAS platforms. This positive guidance follows a period of rapid revenue growth, with Q3 2025 revenue hitting $10.1 million, up from $1.5 million a year earlier, primarily driven by defense contracts in Israel. However, the DeepValue master report assigns a STRONG SELL rating, noting that Ondas' market cap of ~$5.2 billion is excessively high relative to its $20.6 million 9M 2025 revenue and persistent operating losses. The report emphasizes critical risks including extreme equity dilution—shares outstanding ballooned to ~405 million—gross margins stuck in the mid-20s, and heavy reliance on a few customers for revenue. While the raised outlook may signal progress, investors should demand proof that Ondas can achieve the ≥$110 million revenue with ≥35% gross margin by FY26 needed to justify a more bullish stance.

Implication

Ondas' increased 2026 revenue target suggests backlog growth and potential contract wins, which could drive top-line expansion if realized. Yet, the company must improve gross margins from current ~26% levels to at least 35% and demonstrate sustainable profitability to support its valuation. Significant dilution from past equity raises has eroded per-share value, and further capital needs could worsen this, as highlighted in the report. Given the high customer concentration and geopolitical risks tied to key markets like Israel, any contract delays or cancellations could severely impact revenue. Investors should remain cautious, awaiting quarterly results that show consistent margin improvement and backlog conversion before reconsidering the investment thesis.

Thesis delta

The news of a stronger revenue outlook for 2026 aligns with the bullish condition in the DeepValue report, which requires ≥$110 million revenue with ≥35% gross margin by FY26 to change the call. However, without evidence of margin expansion or reduced losses, the core thesis of overvaluation and high risk remains unchanged. A shift would only occur if Ondas consistently meets or exceeds these targets in upcoming financial reports.