3 reasons to buy DroneShield shares after their 74% decline

DroneShield Ltd (ASX: DRO) has given shareholders a rough ride in 2026.

But I still believe the long-term opportunity in counter-drone technology is substantial.

For investors comfortable with high risk and plenty of volatility, here are three reasons I would consider buying the shares in September.

A much lower entry point

The first reason is simple. Investors can buy DroneShield shares for considerably less than they could previously.

The shares are trading around $1.75 on Monday, close to their 52-week low of $1.68 and roughly 74% below the 52-week high of $6.71.

It is always important to highlight that a falling share price does not automatically create value. But I think the size of this decline is worth considering alongside what has happened to the business.

DroneShield is still growing strongly. Its latest half-year result showed rapid revenue growth, even if some parts of the performance were softer than investors had hoped.

For me, the lower price changes the risk-reward equation.

I would still keep the position relatively small because DroneShield remains a relatively speculative growth investment. But I am far more comfortable buying near $1.75 than chasing the shares when enthusiasm had pushed them above $6.

The market could become enormous

Counter-drone technology is quickly becoming a more important part of modern defence.

DroneShield estimates the counter-UAS market is already worth more than US$10 billion. Its products are designed to help military, government, law enforcement, and critical infrastructure customers detect and respond to drone threats.

I think the opportunity extends well beyond today's conflicts. Drones are becoming cheaper, more capable, and harder to detect. Airports, prisons, power infrastructure, military installations, and other sensitive sites all have reasons to improve their protection.

DroneShield also continues updating its software to respond to faster drones, changing frequencies, and more evasive threats.

That ongoing need to adapt could support demand for both new systems and continued software development.

DroneShield is preparing to operate at greater scale

I also like what the company is doing outside Australia.

DroneShield established a European headquarters in Amsterdam this year and has begun manufacturing counter-drone systems in Europe using a predominantly European supply chain.

I think that is a significant step. Defence customers often care about local manufacturing, supply security, and sovereign capability. Having production closer to European customers could help DroneShield compete for opportunities that may have been harder to pursue from Australia alone.

The company is therefore building the infrastructure needed for a much larger international business rather than simply waiting for demand to arrive.

Foolish takeaway

DroneShield is still one of the higher-risk shares I would consider buying, and I would expect the share price to remain volatile.

But the long-term story continues to interest me.

At around $1.75, investors can back that opportunity at a fraction of the price available near last year's highs. If DroneShield keeps expanding internationally and counter-drone spending continues rising, I think its business could look considerably bigger a decade from now.

The post 3 reasons to buy DroneShield shares after their 74% decline appeared first on The Motley Fool Australia.

Motley Fool contributor Grace Alvino has positions in DroneShield. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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