We recently published a list of the 10 Worst Performing Defense Stocks So Far in 2025. In this article, we will take a look at where ParaZero Technologies Ltd. (NASDAQ:PRZO) stands against other worst performing stocks this year.

US defense stocks have wobbled this year, amid concerns about government budget cuts. In February, President Trump hinted at significantly reducing future military spending if things settle down with China and Russia. The creation of DOGE has also reshaped investors’ views of the industry.

READ ALSO: 10 Best Performing Defense Stocks So Far in 2025 and 13 Best Defense Stocks to Buy According to Billionaires.

Elsewhere, particularly in Europe, stocks have soared this year, with governments unlocking billions to supercharge their militaries. EU leaders met in Brussels in March to discuss the ‘ReArm Europe Plan’, which will allow the bloc to mobilize funds up to $860 million through bonds and relaxed rules on borrowing and spending.

Despite a shaky start to 2025, analysts at UBS are hopeful about America’s defense sector and believe the downside is shrinking and the FY26 budget request would present a better visibility into long-term expenditure plans. Here is what the firm recently stated:

“Consensus estimates have moved higher since the election despite the 40% sell-off. The downside potential seems increasingly smaller. We believe that the current environment is markedly different from Sequestration and do not believe a similar outcome is likely.”

Citi analyst Jason Gursky is also urging investors that this is the right time to buy American defense stocks.

“We recognize the world order is evolving under the current President, perhaps to a multi-polar one in which three countries control spheres of influence over the Americas, Europe and Asia. However, we don’t view that world to be any less dangerous or one that decreases the need to acquire the tools of deterrence.”

Gursky argues that as long as the global threat environment remains and the United States maintains its leadership role, regardless of whether it is as a sole superpower or as a power in a multipolar world order, defense spending is expected to remain robust, which would benefit stocks in the sector.

Gursky argues that as long as the global threat environment remains and the United States maintains its leadership role, regardless of whether it is as a sole superpower or as a power in a multipolar world order, defense spending is expected to remain robust, which would benefit stocks in the sector.

A financial planner analysis their portfolio and making decisions on stocks and assets.

Methodology

For this article, we went through screeners to identify stocks in the aerospace and defense industry. From there, we picked the top 10 stocks with the worst year-to-date negative returns in share price, as of the close of business on March 26, 2025. Pure-play aerospace stocks that do not deal in defense contracts have been excluded from the list. The stocks are ranked according to their share price decline.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

ParaZero Technologies Ltd. (NASDAQ:PRZO)

YTD Decline in Share Price: -58.16%

ParaZero Technologies Ltd. (NASDAQ:PRZO) is an Israel-based aerospace company that provides safety systems for defense counter-UAS systems and commercial unmanned aircraft.

On March 27, the company announced that it had signed a non-binding letter of intent to acquire Lulav Space Ltd., which specializes in counter-drone systems and autonomous drone technologies. The proposed acquisition is likely to close during the second quarter of the year and would add advanced space technologies and deep-space navigation expertise to ParaZero Technologies Ltd. (NASDAQ:PRZO)’s portfolio.

Earlier in the month, the company declared financial results for the fiscal 2024. ParaZero Technologies Ltd. (NASDAQ:PRZO) reported a 50.2% increase in its sales to $0.93 million, driven by a shift toward OEMs integrations that contributed a higher volume of sales compared to the aftermarket segment.

Cost of sales increased by 83.3% from last year due to an inventory write-off and a surge in the volume of sales during the year. Research and development expenses were up by 237% year-over-year, while sales and marketing expenses grew 121.6% from last year. ParaZero Technologies Ltd. (NASDAQ:PRZO)’s net loss was recorded at $11 million, worsening significantly from a loss of $3.77 million in 2023.

ParaZero Technologies Ltd. (NASDAQ:PRZO)’s shares have slumped by over 58% year-to-date, earning it a place in the list of the worst performing stocks this year. The stock risks another non-compliance notice from NASDAQ with a potential delisting warning, as its minimum bid price has again fallen below the $1 mark after regaining compliance in December.

Overall, PRZO ranks 3rd among the worst performing defense stocks so far in 2025. While we acknowledge the potential of defense companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PRZO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.