Al Root

Shares of drone technology company Swarmer had a day for the ages on Tuesday, soaring 520% from their $5 initial public offering price to close at $31.

Shares were up another 32% in premarket trading at $40.94, while S&P 500 and Dow Jones Industrial Average futures both rose about 0.5%.

Performance like that raises the obvious question: How did that just happen? There are a few reasons investors gobbled up stock in the new defense contractor, including its real-world battlefield experience.

Drones are Hot

Conflicts in Ukraine and Iran have highlighted the need for smart, low-cost autonomous battle solutions, with the latest conflict in Iran giving shares of drone technology companies, already flying high, an additional boost.

Karman, for instance, had risen almost 180% in the 12 months leading up to the late-February U.S. military action. Shares have risen another 18% since then. That's left Karman stock trading for about 150 times earnings expected over the next 12 months, according to FactSet, up from about 90 times a year ago.

Swarmer Is Small

Karman is valued at roughly $14 billion, more than 35 times the roughly $380 million market value Swarmer closed with on Tuesday. Swarmer is still relatively small, with 2025 revenue of less than $1 million. But small, in this instance, worked to Swarmer's advantage. Almost any contract win or business expansion can move the needle significantly for Swarmer, and investors, it seems, are betting on something like that happening in the relatively near future.

Real World Experience

Swarmer' technology has been used in combat in Ukraine more than 100,000 times, with improvement an existential necessity for Ukraine and its fighters.

The Ukrainian military needed to launch "millions of drones" but didn't have "millions of pilots," said CEO Alex Fink. "That's why Swarmer started, to enable one person to launch hundreds of drones."

A swarm isn't simply one drone following the leader. Each drone, connected via Swarmer's software, knows everything about other members of the swarm and can make independent decisions.

Founded in 2023, the company has demonstrated an impressive ability to rapidly develop and improve technology, which it hopes will help it succeed against larger, better-capitalized defense contractors.

"The fact that these guys are in it every day ... gives a level of credibility," said Swarmer's non-executive chairman, Erik Prince. "The Russians have a very serious electronic warfare environment. It is the most intense ground combat in the world. [Swarmer] is doing that."

Swarmer envisions integrating its software with air, land, and sea drones. "There's a lot of different platforms we want to work [with] and to be Swarmer-enabled ... to work together," said Fink.

"Can you imagine the demand for interceptor drones across the entire Middle East?" added Prince. The U.S. and its allies are currently dealing with the problem of using missiles costing some $4 million each to shoot down drones costing closer to $40,000 apiece.

Ultimately, that potential and its successful operating history led to the jump in Swarmer's stock price Tuesday.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 18, 2026 06:38 ET (10:38 GMT)

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