Red Cat Holdings Inc. (RCAT) stock experienced a significant pre-market plunge of 14.16% on Tuesday morning. The drone technology company's shares tumbled following the release of its disappointing fiscal second-quarter 2025 earnings results.

According to the earnings report, Red Cat posted a wider net loss of $13.3 million, or $0.18 per share, compared to a net loss of $5.8 million, or $0.11 per share, in the same period last year. The company's revenue declined by 60.95% to $1.53 million, missing analyst estimates of $4.13 million.

The disappointing financial performance overshadowed Red Cat's earlier announcement of a strategic partnership with Palantir Technologies to integrate visual navigation software into its Black Widow drones. The company had cited its decision to halt production of the Teal 2 drone and focus on the Black Widow model as a key factor impacting short-term revenue. However, Red Cat believes this strategy will prioritize long-term growth and position it to meet the demands of a new U.S. Army contract and other programs.