Shares of Israeli drone company Aerodrome plunged after it lost a major Defense Ministry contract and failed to disclose critical information to investors.
The company, which specializes in intelligence-gathering and AI-driven digital insights, confirmed Sunday it had received an inquiry from the Israel Securities Authority (ISA) regarding its recent announcement about a reduced defense order. Trading in Aerodrome's stock opened late, dropping 18%, and ended the day down 8.1%.
Two weeks ago, Aerodrome reported that the Defense Ministry had cut its order of drones and related products by approximately half but did not provide an explanation. Following that announcement, the company’s stock plummeted 28.5% in a single trading day.
The ISA inquiry revealed that Aerodrome failed to meet delivery deadlines, leading the Defense Ministry to transfer the remaining order, valued at approximately 70 million shekels ($19 million), to Banda Technologies, the second-place bidder.
Aerodrome also withheld this information from investors. In its statement to the Tel Aviv Stock Exchange, the company acknowledged that it is “addressing various technical claims from the Ministry of Defense regarding the supplied products.”
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In October, Aerodrome announced it won the defense contract, worth 137 million shekels ($37 million), the largest in the company's history. On the day of the announcement, its stock surged 63%. The contract value exceeded Aerodrome’s total revenue, which was just 6.6 million shekels ($1.8 million) in the first half of 2024.
A letter signed by Daniel Soud, head of the drone division in the Defense Ministry's procurement administration, confirmed that the ministry transferred the remaining contract to Banda Technologies due to "partial delivery of the first order."
The incident marks a significant setback for Aerodrome as it struggles to meet contractual obligations and maintain investor confidence.