Unusual Machines has doubled in a week — and the trigger wasn't an earnings beat or an analyst upgrade. It was the White House.
Reports emerged on May 28 that the Trump administration is in active talks to take equity stakes in domestic drone makers as part of a broader push for US drone dominance. UMAC — already tied to the Trump orbit through Donald Trump Jr.'s involvement — was immediately in the crosshairs of that trade. The stock surged 57% on Thursday alone, closing at $29.60 and finishing the week exactly 100% higher. A partner company, Powerus, was simultaneously selected for Phase 2 of the Pentagon's $1 billion Drone Dominance program. That combination of catalysts compressed months of thesis into a single trading session.
The positioning picture heading into that move was already charged. Short interest ran at 16.3% of the free float — a meaningful level — and had been slowly unwinding over the past month, down about 22% from late April highs of roughly 7.9 million shares. As of May 28, approximately 6.0 million shares remained short. The stock's doubling will have inflicted real pain on those holdouts. Borrow costs, though, give little away: the cost to borrow eased to just 0.80%, down from above 1.2% a month ago, reflecting a lending market that never became truly stressed. What is notable is the shift in availability. A week ago, availability had tightened to around 30-33% — suggesting most borrowable shares were already lent out. By May 28, availability had loosened sharply back to 108%, meaning the lending pool has effectively reset as shorts covered into the rally.
Options traders were already leaning bullish before the catalyst hit. The put/call ratio dropped to 0.41 on May 28, running about 1.4 standard deviations below its 20-day average of 0.45. Call demand was clearly running ahead of puts. That skew was in place even before the news broke — the ratio had been drifting lower from around 0.51 in late May — suggesting at least some positioning for an upside catalyst in the options market.
The Street hasn't caught up yet, and the gap is stark. Needham raised its target to $22 on May 15, the day after Q1 results came in sharply above expectations (EPS of $0.21 beat the $0.14 estimate; revenue of $8.1 million blew past the $5.0 million consensus). Roth Capital initiated with a Buy and a $25 target on May 13. Both actions were taken with the stock trading well below current levels. The consensus mean target is $25.33 — the stock is now trading nearly 17% above that. Analyst upgrades will follow, but none have been filed yet. Until targets are revised materially higher, the fundamental case for the stock at current prices rests almost entirely on the government-equity-stake narrative rather than near-term earnings power. Bulls point to the US drone supercycle and the prospect of large government contracts. Bears flag supply chain exposure, customer concentration risk, and the political nature of the catalyst as sources of uncertainty.
Institutional flows reinforce the idea that smart money was already building positions ahead of the move. Several new holders appeared in the March 31 filings: Columbia Management, Vanguard Capital, Davidson Kempner, Citadel, and FMR all disclosed fresh positions. Tudor Investment added roughly 800,000 shares on top of an existing stake. Most of these entries were made at prices well below the current level. The ORTEX short score has eased from a peak of 66.5 a week ago to 63.5, consistent with the short interest reduction — though it remains elevated in absolute terms.
The next confirmed earnings event is August 11. Between now and then, the main variable is whether any formal announcement on US government drone-equity participation materialises — and whether UMAC is named directly in any programme documentation.
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