Opinions
Fabrice Taylor
Drone Delivery Canada Corp
FLT-X
COMMENT
Dec 02, 2016
Stock price when the opinion was issued
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They are going through a quite solid trial of operations. They are dealing with aviation, so have to get permited, totally acknowledged, and inspected by the authorities. They are in the forefront of Canadian drone operations. Thinks they probably will do well. They have good relationships with things like Canada Post.
The stock has gone up significantly over the past year. They are expanding into the US. They are developing the capability to carry up to 25 pounds, which will be enough for many retail products. Once they are licensed in the US and Canada, they will be able to deliver products to customers, for a company like Canadian Tire, for much less than the cost of delivery by truck. Once they are licensed, they will be an obvious buy-out target for companies like UPS or FedEx. (Analysts’ price target is 3.00$)
He met with them a month ago. They have a trial underway in Northern Ontario, delivering packages that are less than 10 pounds. The stock has been going sideways while people wait to see whether the trials are successful. He thinks success is a sure thing. They’re also moving to much bigger drones that can carry a skid-sized container (up to 2500 pounds) for long distances. Thus they will be able to provide delivery services for a company like Amazon, of mail for Canada Post, and of medical or food supplies to remote communities.
He doesn't follow this closely, because it's a pre-revenue company that isn't generating positive cash flow yet, so it's too early for him to consider. It's in the drone delivery space, an interesting space. The big problem is that he doesn't know the future of drone delivery or if this company can execute. He would wait before looking at it.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Air Canada is a sales agent and helps them win deals. The stock has doubled this year and interest remains high in drones. Revenues should be around $12M this year. There are multiple letters of intent that should develop into business over time. Unlock Premium - Try 5i Free
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. There has been no news to account for the recent pull-back. It is probably profit taking since it is up 86% this year. Growth stocks in general have seen weakness. Remains interesting and finances look good. Revenue base is still low and expectations are high. It will likely perform not as well in a weak overall market environment. Unlock Premium - Try 5i Free
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The Edmonton airport deal is positive and the company continues to announce engagements over the last couple of months. Revenues are still low though it has hit $450K on a trailing twelve month basis last quarter. Unlock Premium - Try 5i Free
Drones. He wouldn’t want to own a drone maker, because it is going to be a Chinese industry. Instead of drones, these people are aiming for air rights, which he finds interesting. That is an asset you can’t replicate. Management is very, very skilled. They have built and sold a number of tech companies. They’ve just signed a contract with one of the shippers. He believes drones will eventually play a big part in the delivery business.