Unusual machines and unusual deals

These days, Uncle Sam is going on a bigger shopping spree than your post-divorce uncle grabbing gadgets at Best Buy.

Dronemaker Unusual Machines surged 57.2% after the Wall Street Journal reported that the Trump administration is in negotiations to ink funding deals with a slew of private-sector drone companies.

You may think of drones as your brother’s annoying Christmas present, but the US government is more interested in the lethal kind. The Iran war has heightened the Pentagon’s need for drone technology, as well as anti-drone measures. The US is hoping that by funding the nascent domestic drone industry, it can not only boost production, but lower the costs of the weapons.

While the White House has not confirmed the report, that hasn’t stopped investors from going all-in on Unusual Machines, which is currently the only publicly traded dronemaker that the WSJ noted could be a potential deal recipient.

Here’s the other drone companies the US could be bankrolling:

• Performance Drone Works, which already has a contract to provide the military with reconnaissance drones, according to the WSJ.
• Neros Technologies, a startup developing first-person-view drones, could also get a US-sponsored windfall.

Other dronemakers not mentioned in the WSJ report rose on the news that the entire industry could be getting a boost: Ondas rose 22.69%, Red Cat Holdings jumped 32.61%, and AeroVironment rose 18.26%.

Zoom out: This isn’t the first time Unusual Machines has flown into the spotlight: Back in November 2024, the stock surged 250% in two days after the company announced that Donald Trump Jr. would join as an advisory board member (he’s also a shareholder).

For retail investors, Unusual Machines is also a ‘picks and shovels’ drone play: It not only owns its brands, it also makes the materials needed to build military drones. But investors are making a highly speculative play based more on politics than balance sheet fundamentals.

The stakeholder in chief

The US government is taking a hands-on role in fostering the industries it wants to see grow. Since August, the Trump administration has taken stakes in chipmakers like Intel, as well as a slew of quantum-computing companies, plus made major investments in critical minerals giants.

It’s a double-edged sword: On one hand, a governmental boost does strengthen domestic industries and makes the US less reliant on foreign supply chains. And for the lucky companies selected, their share prices tend to explode. But critics have pointed out that Uncle Sam picking winners and losers can distort free-market forces.

For better or worse, the wheeling and dealing doesn’t seem to be ending anytime soon.—LB