By Angela Palumbo

Red Cat stock was soaring Monday after the company announced a partnership with software company Palantir Technologies.

Red Cat announced on Monday it entered into a partnership with Palantir to integrate visual navigation software into its Black Widow drones.

This collaboration utilize Palantir's AI software running onboard the drone to provide accurate navigation entirely independent of GPS or radio control signals, the news release said.

In a note on Monday, Ladenburg Thalmann Research analyst Glenn Mattson wrote Palantir is "on the cutting edge of AI software for government and military applications, adding them as a partner highlights the significance of RCAT's program."

Mattson rates Red Cat as a Buy with a $9 price target.

Shares of Red Cat were up 25% Monday to $10.35. The stock, with a market cap of $810.5 million, has surged 1,074% this year, on pace for its best year since 1999, when it rose 1,411%, according to Dow Jones Market Data. Meanwhile, Palantir shares were down 1.7%. That stock has a market cap of $173 billion and has jumped 336% in 2024.

Red Cat was gaining attention by retail traders on Reddit forum Wall Street Bets on Monday as one of the most talked about stocks by users. The company is also scheduled to report fiscal second-quarter earnings after the stock market closes on Monday. In the last quarter, Red Cat reported a loss of 17 cents a share on revenue of $2.8 million.

Other drone stocks were also climbing on Monday. Archer Aviation, which was recently bought by Cathie Wood's ARK Invest, was rising 9.2%. Unusual Machines was rising 23% and Kratos Defense & Security Solutions was up 5.9%.

The sighting of drones throughout the Northeast has made headlines in recent weeks. The Federal Bureau of Investigation and Department of Homeland Security have said they don't have any current evidencethe drones pose a threat to public safety.

Red Cat didn't immediately respond to a request for comment on the drone sightings.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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December 16, 2024 15:53 ET (20:53 GMT)

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