Earlier this year, the DroneShield Ltd (ASX: DRO) share price seemed unstoppable. It soared to an all-time high of $2.72 in mid-July, stretching up from lows of 33 cents just six months prior.

The ASX counter-drone technology company now finds itself trading at just 76 cents apiece on Friday, 72% below its record high.

Zooming out, though, the stock has still more than doubled in value this year to date, despite the sharp selloff from July.

What's next for the DroneShield share price? Will it reclaim its former glory? Or is this as good as it gets? Let's see what the experts say.

What's driving the DroneShield share price plunge?

The DroneShield share price has had a volatile year, losing significant ground since its mid-year highs. From January, investors had bid up the stock by more than 580% by that point.

Consequently, DroneShield was always going to face challenges in meeting the high expectations baked into its share price earlier this year.

The company's latest quarterly numbers provided good insight into current progress. On the upside, the company recorded quarterly cash receipts of $9 million, up 18% year over year. Year-to-date cash receipts were also up 20%.

But revenue for the first three-quarters of FY24 was down 20% compared to the same period in FY23.

This drop is largely attributed to the absence of a one-off $33 million contract from last year, which skewed the result. But circling back to my original point – investor expectations were high.

Despite management's assurance that year-end revenue could reach $55 million with products already delivered or scheduled for delivery, the market acted decisively.

So where to from here?

Now that we've unravelled what happened to the DroneShield share price this year, the question is, what's in store for the coming years?

For one, the company has a $1.1 billion sales pipeline, but turning those opportunities into revenue remains a work in progress.

Analysts are also mixed. Bell Potter recently upgraded the DroneShield share price to a buy, citing the stock's sharp decline as a potential buying opportunity.

The broker's reduced price target of $1.20 says a lot. But it highlights the company's $18 million in contracted revenue for 2025 as a positive sign.

While Bell Potter is concerned about global demand for counter-drone technology, it acknowledges increased operating expenses as a headwind.

DroneShield is also rated a buy from consensus, according to CommSec.

As to the 'end-market', the growing use of drones in conflicts has created a niche segment for operators like the company.

Recent global conflicts have underscored the importance of counter-drone systems.

However, the path back above $2 won't be easy, if achievable at all, in my view. Investors bid it up that high on huge expectations – perhaps some speculative fever in there as well.

From here, the company must demonstrate consistent revenue growth and successfully convert its sales pipeline into tangible contracts. This might warrant the DroneShield share price above $2, but only time will tell.

Foolish takeaway

Although the DroneShield share price has fallen far from its mid-year highs, the company's strong sales pipeline and global demand for its technology provide reasons for long-term optimism.