What Happened?
Shares of aerospace and defense company Kratos (NASDAQ: KTOS) fell 8.2% in the afternoon session after prominent investor Cathie Wood's investment funds sold their shares in the company.
The sale was conducted through the ARKK, ARKQ, and ARKX funds. This move occurred as the broader defense sector also faced a downturn. Other major defense stocks experienced declines attributed to geopolitical tensions, global uncertainties, and investors taking profits. Market sentiment for the sector appeared to overshadow the otherwise strong long-term growth prospects.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Kratos? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Kratos’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock gained 7.9% on the news that its Valkyrie uncrewed aerial system was selected for a significant U.S. Marine Corps contract, coupled with a broader rally among defense stocks.
The contract, valued at $231.5 million, was awarded to Northrop Grumman, which will act as the prime contractor. Northrop Grumman planned to integrate Kratos' Valkyrie drone into a new collaborative combat aircraft designed to support crewed fighters in high-threat areas. This selection validated Kratos' technology and positioned it at the center of future military strategy. Adding to the positive sentiment, a proposal was announced for a monumental $1.5 trillion U.S. defense budget for 2027, which aimed to accelerate military modernization and caused a rally across the sector.
Kratos is up 49.1% since the beginning of the year, but at $118.20 per share, it is still trading 9.6% below its 52-week high of $130.72 from January 2026. Investors who bought $1,000 worth of Kratos’s shares 5 years ago would now be looking at an investment worth $4,016.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report, it’s free.
