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Drone Delivery Canada Corp. Is As Speculative As The Industry Peers

Joris Gijzendorffen profile picture
Joris Gijzendorffen


  • Drone businesses have seen their valuations multiply recently, reaching all-time highs in February 2021, before coming down somewhat over the course of March.
  • Drone Delivery Canada Corp. was one company with a run-up in share prices. Two of the industry peers, Draganfly and Alpine 4 Technologies, had a simultaneous surge.
  • Drone Delivery Canada Corp. has virtually no revenue yet and the services are still in testing. There's no financial basis for a multiplying share price. It's a purely speculative run-up.
  • Investors should be cautious with investing in Drone Delivery Canada Corp., just as with the peers. The company will run out of cash soon and new funding will be needed.

Drone Businesses: Very Necessary, Hard To Scale

Let me start out by stating that I'm a believer in drone businesses. Drones have already successfully been applied for military purposes, in policing, in the inspections of industrial plants, in the delivery of medicine or packets, in spraying of liquids or anti-infectants and countless other situations. Drones can thus be used to deliver valuable and necessary services. A quick scan of online available estimates for market size and growth rates of the drone industry reveals a very positive outlook for drones. Growth rate estimates are generally double-digit for the coming years and the market size potential for drone services is generally estimated to be in the 10s of billions of annual revenue.

This emphasis on my enthusiasm for drone businesses comes first, because I've recently written two bearish articles about two drone companies, which may give the impression of the opposite. My bearish conclusion about those two companies, however, doesn't have anything to do with the use of drones or the viability of drone companies. It was the insane market capitalization that the market had assigned to them. The market seems to have unrealistic expectations about the growth potential of some drone companies.

Specialized drone companies are often still in an infancy phase with very limited revenue and immature services. The companies that are discussed in this article are very small in terms of revenue and have uncertain prospects. The products and services that they deliver are often tailor made per client and require teams of technicians for the development, installation and maintenance. Each client has specific requirements that need separate solutions and separate manpower.

Drone services are far from "one-size-fits-all" and therefore hard to scale. This poses a challenge for drone companies and puts a cap on how fast the businesses can be expected

This article was written by

Joris Gijzendorffen profile picture
TMT sector professional. Over 20 years of experience working in the sector in Europe and outside Europe. Decade of investing experience to keep in close touch with companies and themes that are relevant for my work.Companies where I worked are among others: KPN, Chellomedia, Liberty Global, UPC Cablecom Switzerland, Get Sweden, Ooredoo Middle East, Cell C South Africa, Du Dubai, Axiata South East Asia, Celcom Malaysia, Vodafone.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (7)

Not sure if you just didn’t notice but they released their latest earnings last week and their cash position is over $23 million and their current liabilities are under $2 million. I agree very speculative but the revenue was 200k this quarter so quite a jump from the 30k last quarter.
Joris Gijzendorffen profile picture
@gord_s thanks for the addition. The article and the latest numbers coincided. The revenue of 200k / quarter is still negligable. The cash will provide more runway, need for external funding remains imo.
@Joris Gijzendorffen I definitely agree that they will likely need funding again but they should have time to optimize the timing on another offering.
If they are not more speculative than their peers I‘m happy to be in game :)
Joris Gijzendorffen profile picture
@Dennroe i had to think about your comment for an instant...thanks anyway!
Picked up 1000 shares of TAKOF months ago when it was at $1.30 USD and have been just patiently reading all news and silently cheering them on. No intentions of selling these anytime in the near future, might be a few more years before it lives up to the moniker, but I suspect it eventually will ;)
Joris Gijzendorffen profile picture
@CrimsonPhoenix If they can find the funding and with lots of patience they have a good chance. We will see in years to come. Good luck with your position.
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