Red Cat Holdings: Potential $160M Annual Upside from DJI Ban in 2024

Red Cat Holdings has significant upside potential in 2026, with a possible DJI ban next year leading to $160 million in annual revenue. The company's stock has 13x revenue potential, making it a promising investment opportunity.

Red Cat Holdings, Inc. (NASDAQ:RCAT) has significant upside potential in 2026, with a possible DJI ban next year potentially leading to $160 million in annual revenue. The company's stock has a 13x revenue potential, making it a promising investment opportunity.

According to a recent article [1], the company has identified a new pillar to its bull case, which could add $160 million per year in revenue if a catalyst is realized by the end of 2025. This catalyst is tied to the National Defense Authorization Act (NDAA) §1709, which has a ticking clock towards a potential DJI equipment authorization cutoff by the end of the year. If public agencies lose access to new DJI approvals, a significant chunk of public safety demand must shift to compliant vendors.

Red Cat is positioning itself to capture this market shift with a civilian version of its Black Widow drone. The company's CFO, Christian Koji Ericson, confirmed that they are developing requirements for the civilian market and creating a civilian version of the Black Widow, which is expected to enter the market soon. This civilian version would need to remove military components, such as export-restricted parts, while retaining key value drivers like thermal imaging, RGB cameras, autonomy, field repairability, and Remote ID.

The global public safety drone market is approximately $5.9 billion in 2025, with DJI currently holding around 90% of the U.S. market. If DJI is blocked from new US approvals, the U.S. public safety market could see a $1.6 billion displacement. Assuming Red Cat captures 10% of this market, it would result in $160 million in annual revenue, leading to a potential price-to-sales (P/S) multiple of approximately 5.2.

However, there are risks to consider. The company's stock has seen a 10.2% decline in the past year, with a 12-month low of $2.31 and a 12-month high of $15.27. Additionally, Northland Capmk has lowered its earnings estimates for Red Cat [2], and insider selling activity has raised concerns among shareholders.

Despite these risks, the potential for a civilian version of the Black Widow and a possible DJI ban in the U.S. presents a significant opportunity for Red Cat Holdings. Investors should keep a close eye on the FCC's covered list and the outcome of the NDAA §1709 audit.

References:
[1] https://seekingalpha.com/article/4817016-red-cat-holdings-160-million-per-year-upside-from-a-possible-dji-ban-next-year
[2] https://www.marketbeat.com/instant-alerts/northland-capmk-brokers-lower-earnings-estimates-for-red-cat-2025-08-18/