Defense stocks were rising early Monday as fighting continues in Iran and across the wider Middle East. Investors looking to play the trend will soon have a newly public company to look at, one backed by President Donald Trump’s sons.
LMT+2.56%, RTXRTX+2.89%, Northrop GrummanNOC+2.18%, and more defense stocks were edging up in Monday’s premarket. The appointment of Mojtaba Khamenei as Iran’s new supreme leader suggests there will be no quick peace in the Middle East, and therefore demand will continue to boom for equipment, including drones, missiles, interceptors, manned fighter jets, and refueling planes.
Drones are a particularly hot category of military equipment, and Eric Trump and Donald Trump Jr., the president’s sons, are backing a new company aiming to meet rising demand from the Pentagon.
Drone company Powerus plans to merge with Aureus Greenway Holdings
AGH-2.98%, a publicly traded golf-course company linked to the Trumps, according to filings released Monday. The reverse merger will result in Powerus trading on the Nasdaq stock exchange in the coming months.
Aureus shares were up 39% in premarket trading Monday, while S&P 500 和 Dow Jones Industrial Average futures were down 1% and 1.1%, respectively.
Aureus’s shareholders include American Ventures and Dominari Securities, two investment companies with ties to the Trumps, according to The Wall Street Journal. Unusual Machines
UMAC
+7.80%, a drone components company of which Donald Trump Jr. is a shareholder and advisory board member, will also invest in the deal, according to the Journal.
Unusual Machines shares were up 9.8% in premarket trading. Coming into Monday trading, it had a market value of about $600 million. Aureus had a market value of less than $100 million. That’s a fraction of large defense contractors or other drone makers, such as Kratos Defense & Security Solutions 和 AeroVironment. Those two are valued at a combined $27 billion. RTX, Lockheed, and Northrop are worth a combined $540 billion.
Powerus sells aerial and maritime drones and is aiming to build more than 10,000 each month, more than almost any other U.S. drone manufacturer, while also looking at deals to acquire or license technology from Ukrainian companies, the Journal reported.
Defense stocks have got a boost from rising geopolitical tensions. Coming into Monday trading, the iShares Aerospace & Defense ETF was up 62% over the past 12 months. The ETF was down 3.3%, however, over the past week, with investors selling stocks after the fighting in Iran began.
RTX, Lockheed, and Northrop shares dropped an average of 1.1% this past week, leaving the trio up about 54% over the past 12 months.
