Unusual Machines IPO takes flight, bringing chance to invest in FPV drones

Want to invest in FPV drones? With last week’s Unusual Machines IPO, there’s another opportunity to.

Puerto Rico-based Unusual Machines made its public debut on the NYSE American on Feb. 14, 2024, raising $5 million at the low end of its projected range. Trading under the ticker symbol “UMAC,” the stock opened at $4 per share. Shares closed on Friday, February 16 at $2.99.

Unusual Machines is gearing up to be a leader in first-person view (FPV) drone technology. It very likely will soon become the parent company of two other big names in the FPV world: Fat Shark Holdings and Rotor Riot. Fat Shark is best known for making FPV goggles for drone racing. It also makes other products like an all-in-the-box FPV drone racing kit. Both companies are current acquisition targets.

Assuming the acquisition deal goes through, this won’t be the first time you’ll have been able to invest in those two businesses. Both Fat Shark Holdings and Rotor Riot were previously owned by another Puerto-Rico based company, Red Cat.

Yet Red Cat announced in late 2022 that it would sell off its consumer division to Unusual Machines for $18 million. That deal was broken down as $5 million in cash, $2.5 million in a convertible senior note of Unusual Machines, and $10.5 million in Series A convertible preferred stock. The move was done largely for two reasons. For starters, that enabled Red Cat to focus on its flagship business, Teal. Teal has inked some big government contracts for its military-grade Teal 2 drone.

The second big reason is so Red Cat could distance itself from Chinese-affiliated business.  In a previous statement about the sale, Red Cat CEO Jeff Thompson said the company elected to spin off Fat Shark “because it has parts made in China, and we can’t have any connection with China.” Anti-China sentiment is strong in certain sectors of the population. In fact, just last week the U.S. House of Representatives held a subcommittee meeting focused on banning DJI drones. That’s through a proposed piece of legislation called the “Countering CCP Drones Act.”

How are investors feeling about Unusual Machines?

That $5 million Unusual Machines IPO makes for a modest entrance into the stock market. Unusual Machines has a market capitalization of about $27 million.

For some investors, the Unusual Machines IPO offers a unique opportunity to invest in FPV drones. FPV is still a relatively niche field, but it’s seen recent growth and interest from bigger players. DJI made big moves in August 2022 when it dropped its Cinewhoop-style Avata drone. That drone is particularly well-suited for indoor flying. Meanwhile, drone video networks like AirVuz showcase the power of FPV imagery with their annual FPV drone video of the year contest.

And still, Unusual Machines could face challenges. As a relatively new, company it must compete with established players like DJI. Additionally, the broader drone industry faces regulatory hurdles and concerns over privacy and safety. And by some accounts, the hobby drone market is actually shrinking.

Still though, the Unusual Machines IPO, was a low-key yet significant step for the company. The raised capital could help fund its growth plans, including product development, marketing, and expansion into new markets. However, investors should be aware of the risks involved, given the company’s size, niche focus, and competitive landscape.

The coming months will be crucial for Unusual Machines as it navigates the public markets and executes its growth strategy. If the company can successfully tap into the potential of the FPV market, its modest debut could be the first chapter in a much larger story around both FPV drone flying and more broadly investing in drones