NEW YORK, May 28, 2026, 06:05 EDT
- Kratos traded up 11.2% in premarket after drone-related names rose on news of potential U.S. government funding for drone manufacturers.
- Shares finished at $57.30 on Wednesday, up 0.88%.
- U.S. stock futures slipped while oil and Treasury yields went up, as U.S.-Iran tensions pressured the market. The broader tape was also weaker.
Kratos Defense & Security Solutions stock took off in premarket trade Thursday, lifted with other U.S. drone names after word the Trump administration is discussing funding for domestic drone companies. The Reuters report pushed Kratos up 11.2% ahead of the open, with AeroVironment up 9.1% and Unusual Machines rallying 33%.
Timing is key here. Washington wants to bolster its domestic drone industry — meaning uncrewed aircraft for surveillance, attack and support — and that’s got investors seeing a potential boost for smaller defense-tech firms, not just the traditional big defense contractors.
Reuters, citing The Wall Street Journal, reported the Pentagon and the Office of Strategic Capital are in talks about funding, with the lending unit focusing on companies key to national security supply chains. Reuters said it wasn’t able to confirm the Journal’s report. The White House, Pentagon and the firms named didn’t respond to requests for comment.
Kratos wasn’t listed as a direct funding target in the report, but the company is seen as part of the same conversation. It makes jet-powered drones, rocket and missile products, propulsion tech and hypersonic gear. Investors often tie these with the Pentagon’s push for cheaper, higher-volume weapons.
U.S. stock index futures pointed lower early, with Dow E-minis down 0.1% and S&P 500 E-minis losing 0.09% as of 04:54 a.m. ET. Nasdaq 100 E-minis slipped 0.21%. Oil prices rose more than 2% and Treasury yields climbed after new U.S.-Iran tensions.
Inflation numbers coming out later Thursday may shift sentiment. “A higher-than-expected print will further boost hawkish Federal Reserve expectations,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank, talking about the personal consumption expenditures index, which is the Fed’s preferred inflation gauge. Reuters
Kratos posted first-quarter revenue of $371 million, a 22.6% increase from last year. Adjusted earnings per share came in at 16 cents. Bookings hit $605.2 million and the book-to-bill ratio was 1.6. The numbers give investors more to consider with the stock.
Kratos CEO Eric DeMarco said in the May 6 release the company is seeing what he called a “generational recapitalization” of the U.S. defense industrial base, and said “demand signals are real.” Kratos reported consolidated backlog of $2.01 billion as of March 29, up from $1.57 billion at Dec. 28. Kratos Defense & Security Solutions, Inc
Kratos is now guiding for fiscal 2026 revenue of $1.70 billion to $1.76 billion and sees adjusted EBITDA between $170 million and $176 million. That outlook includes Orbit Technologies.
Kratos is spending on the theme too. The company picked Odon, Indiana, for a new arc jet and laser site focused on hypersonic materials testing, announcing the move May 8. Michael Johns, senior vice president at Kratos, said the location search was a “highly competitive process.” Kratos Defense & Security Solutions, Inc
The trade still faces holes. Funding talks might not end up as real deals, and Kratos isn’t listed with possible recipients. Debt or equity from the government would fall short of a full production contract. Kratos said higher spending on staff, inventory, and plants is squeezing margins and free cash flow, and flagged risk of supply-chain and output problems. Reuters
Right now, the stock trades on signals, not awards. The key question is if Washington’s drone push turns into funded orders — and if Kratos can turn its backlog and investment cycle into cash instead of just more growth.
