Remember when London Gatwick was shut down in the week before last Christmas because of a drone?

This is symbolic, both of the rise of drones and the rise of action against them.

Drones are being adopted en masse by amateur drone enthusiasts and tech giants such as Uber and Google – both wanting to begin drone delivery services.

Of course, drones have many useful applications – including use in the detection of sharks and conducting surveys for mining studies.

They are proving their use in situations where it is too difficult or dangerous to send in people, such as forest fires.  

There are eight listed ASX drone companies – all of which are small cap companies. Their range of capabilities reflect the diversity and range of global drone industry.

The drone-makers and drone supporters  

UUV Aquabotix (ASX: UUV) builds underwater drones for uses in science and defence.

Drones can even operate in space. Electro Optic Systems (ASX: EOS) manufacture drone-like sensors that operate in space in conjunction with satellites.

A couple of stocks are also involved with blockchain and are involved with drones as a side project – namely Mobilicom (ASX: MOB) and IOT (ASX: IOT).

Mobilicom’s SkyHopper entity targets the corporate and government sectors with its own SkyHopper drone as well as analytical solutions for drone operators.

IOT positions itself towards amateur users, manufacturing drones to be used to take selfies.

ParaZero (ASX:PRZ) makes drone safety solutions to make the use of drones safer. This applies to commercial and consumer drones.

ParaZero very much positions itself as a supporter of the drone industry and hopes that its safety systems will become a prerequisite for drone use.

The drone fighters

Also supportive of the growing drone industry are the drone fighters that rely on an increasing amount of drones to make their technology in demand.  

Drone mitigation companies include Droneshield (ASX: DRO) and Department 13 (ASX: D13).

The devices of these, and other non-listed companies, can detect and manually overpower drones, either taking them out of the sky completely or overriding the controls and directly their flight back to their owners.

This not only mitigates or prevents damage but can track down the owner of an offending drone.

Drone use and regulation

Some questionable uses of drones, both amateur and professional, have led to problems such as the Gatwick airport shut down and people beginning to question if we should halt the roll out of the technology before it’s too late to roll back.

Drones are facing increased regulation and anti-drone technology as the number of drones in the skies, and drone incidents rise.

While there are not publicly available figures in Australia, in the UK, there were 2,400 incidents reported to the police, up by over 40 percent since 2016, including criminal damage, voyeurism and road traffic collisions.

There are existing laws for drone operators. Drones can only be flown during the day and kept within a visual line of sight. They must be no higher than 120 metres, at least 30 metres away from other people and completely away from areas affecting public safety.

But there are likely to be more laws to come including registration, operator tests (similar to drivers) and becoming subject to anti-trespassing laws.

Just this week the Civil Aviation Safety Authority (CASA) in Australia announced it will require anyone wanting to fly a drone over 250 grams to hold a licence and have registered the drone. The laws will be enforced from July.

And even if the law cannot keep up, the public might. Some people, most notably in the Canberra suburb of Bonython, are that upset they have threatened to shoot them down, even delivery drones.

The drone companies, supporters and fighters all rely on the drone industry growth to succeed. Yet, over the past 12 months all but one of the drone stocks have decreased. While Mobilicom is up by 20 percent (only following a spike at the end of March), the remainder have gone down by an average of 39 percent.

Company Code Price (1-April) Market Cap 1 Year Return (%)
Mobilicom MOB 0.10 $21.8m 20
Electro Optic Systems EOS 2.78 $266.2m -11
Orbital Corp OEC 0.36 $27.9m -20
Parazero PRZ 0.098 $9.5m -47
Department 13 International D13 0.041 $47.6m -49
Droneshield DRO 0.11 $21.3m -53
UUV Aquabotix UUV 0.02 $3.2m -73
IOT Group IOT 0.001 $1.8m -80

 

While the ASX has been through various patterns in the last year, it is not a good sign when almost an entire industry has declined.

Although the rise of drones isn’t likely to halt any time soon, it looks as though the rise will not be as seamless as has been anticipated.

 

This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.