Red Cat Holdings Inc. (NASDAQ: RCAT) saw its stock price plummet by 5.10% during Thursday's trading session, following the release of disappointing first-quarter 2025 financial results. The drone technology company's shares had already shown significant weakness in pre-market trading, with an initial drop of over 12% reported.

The sharp decline comes as Red Cat reported quarterly revenue of $1.63 million, falling well short of analyst estimates of $3.85 million and representing a 6.75% decrease from the same period last year. Additionally, the company posted a loss of $0.27 per share, significantly wider than the expected loss of $0.08 per share. These results have clearly shaken investor confidence, leading to the selloff.

Despite the disappointing quarterly performance, Red Cat's management maintained an optimistic outlook. CEO Jeff Thompson highlighted recent operational achievements, including partnerships with companies like Palantir and expansion into new areas such as Unmanned Surface Vessels. The company also reiterated its full-year 2025 revenue guidance of $80 to $120 million. However, the market's reaction suggests that investors may need more convincing evidence of the company's ability to meet these ambitious targets given the current underperformance.