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It helps explain why a company which had only just broken even in June this year, and reported revenue of $57.5 million for the 2024 financial year ending December 31, was trading at 100 times that revenue figure by October. It makes Nvidia look like a staid property trust.
It was too good to last, and investors have now lost $4 billion in just six spectacular weeks to prove it.
The early declines may reflect some of the froth blowing off the stock with some big fund managers selling down their stakes.
But the real fun began earlier this month when Droneshield achieved $200 million of revenue over a 12-month period and more than 44 million performance options handed to staff with a market value of around $180 million at that time.
Around half of these options ended up in the hands of CEO Vornik, his chairman Peter James and fellow director and retail guru Jethro Marks.
Droneshield may take years to recover from what happened next. Within days, the trio converted their options into shares and sold every single share they owned while spruiking to investors that Droneshield has the brightest of futures.
“We … look forward to maximising performance for the remainder of this record year, and building a strong foundation for 2026 and beyond,” Vornik said in the ASX release announcing the vesting of his options.
DroneShield is supplying its counter-drone technology to Ukraine.
The day after directors’ notices were posted to the ASX awarding them their options, the trio began selling shares which were then worth $66 million, with zero warning to their faithful investors.
You can imagine the investor panic when these sales notices hit the ASX and investors realised their chairman and CEO had sold all their shares with no explanation.
The only question was: What do they know that we don’t?
The company still has not offered a satisfactory explanation for the sales, but the board has had other dumpster fires to deal with.
To make matters worse, Vornik, James and Marks were selling their shares just as Droneshield announced another multimillion dollar deal with the US government. It was retracted within hours when executives realised they had actually re-announced an earlier deal.
It may explain why Droneshield’s US chief executive, Matt McCrann, resigned with immediate effect this week, which triggered a fresh share meltdown.
On Friday, shares dropped as much as 12 per cent amid reports a conference call scheduled with investors on Thursday – to shore up market support – was cancelled at the last minute in a perfect illustration of what a shambles the place is.
The most astonishing thing is that investors who bought in at the start of the year have still doubled their money.
But Droneshield has shredded any credibility it has as a trusted corporate player, and we have yet to hear from the corporate watchdog on what it is making of this mess.
At this stage, the Australian Securities and Investments Commission says it is “aware of the matter and will continue to monitor the situation in line with our normal processes”.
And keep in mind that its customers are governments and military departments that need to deal with credible and transparent vendors.
Copenhagen Airport was shut down in September this year amid a drone attack with alleged Russian involvement.Credit: Bloomberg
Mind you, the mind-boggling share sale should not have been a complete surprise.
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It is a repeat of the same stunt this Droneshield troika pulled last year when the company was just a modestly successful tech stock sitting way outside the ASX200 universe.
As Droneshield’s last annual report showed, Vornik sold all of his 10 million-plus shares, Marks sold out too. It was chairman James who retained a modest stake.
And whatever Vornik’s sale says about his loyalty to the company and his (former) fellow shareholders, his ruthless investment savvy may just be a reflection of the industry where he cut his teeth.
For all the media reporting of the Russian-born Vornik’s maths wizardry, he is not the genius behind Droneshield’s technology.
Vornik is a former investment banker who stepped in as one of Droneshield’s first employees and became the finance boss before stepping up as CEO.
If anyone knows when your financial market luck is stretched too thin, it is Vornik.
Now he just needs to learn the art of keeping faith with investors and clients.
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