Kratos is building a drone line for 35-40 aircraft a year. Its order book is four.

Kratos▼−0.59% — Kratos, down 0.59 percent today is ramping a drone production line toward 35 to 40 aircraft a year while its only signed order is four planes, and shareholders are paying for that gap in advance ¹. The stock's slide to a 52-week low of $39.79 on October 14 is the market pricing the order book, not the factory ⁵.

The ramp is sized for an order that has not arrived

The Aviation Week teardown published on October 21↗ is the first place Kratos's ramp and its orders sit together ¹. The XQ-58A Valkyrie, a low-cost uncrewed jet meant to fly alongside crewed fighters, was rescued by the Marine Corps after the Air Force walked away in 2021 ¹. Kratos shipped about eight aircraft in 2025; production is projected at 18 a year in 2027 and 35 to 40 in 2028, out of an Oklahoma City plant that already turns out about 150 target drones and Valkyries a year on one common avionics suite ¹.

The Marines signed for four MQ-58s through Northrop Grumman▲+0.99% — Northrop Grumman, up 0.99 percent today for $231.5 million and has committed to nothing beyond the first batch ¹. The fiscal 2027 appropriations bill carries a $1.3 billion Navy request for collaborative combat aircraft; if it passes as requested, the ramp has a buyer, and interest from Germany, where Kratos teamed with Airbus on a Valkyrie variant that flew in Europe this month, widens the book ¹⁴.

If it does not, Kratos owns a line sized for an order that never arrived, and the shareholders who funded the buildout absorb it.

The cash flow shows who is carrying the bet

Kratos has burned cash in nine of the last ten quarters while quarterly revenue grew from about $277 million to $459 million↗, and 2025 revenue reached about $1.35 billion ¹⁶. Hypersonics, $200 million of sales in 2025 on the Pentagon's Multi-Service Advanced Capability Hypersonic Test Bed program, is projected to pass $700 million in 2027, and the Indiana arc-jet and radar facilities Kratos broke ground on October 14↗ extend that capacity with $35 million of Department of War money ¹².

Citizens, the analyst firm, cut its price target to $70 from $105 on October 19↗ while keeping Market Outperform, blaming elections, budgets and the continuing resolution, not the company ³. Kratos CEO Eric DeMarco is making the same bet he made when he bought CEi, the Sacramento drone maker he acquired in 2012 because its owner wanted to retire: capacity built ahead of demand wins the order ³.

Whether it does is decided by the fiscal 2027 vote, and a position taken before that vote is underwriting the ramp; one taken after it is paying for the confirmation.