So, you know how when a company's stock has been on an absolute tear—like, up 250% in a year—and then it decides to sell a bunch of new shares? Yeah, that usually doesn't go over super well in the short term. That's the story with Kratos Defense & Security Solutions, Inc. (KTOS) on Friday. The defense tech firm priced a massive public offering, and the stock took a dip as investors started doing the math on what all those new shares mean for their existing holdings.
The company said it's selling 14,285,714 shares at $84.00 apiece. That's a roughly $1.2 billion deal after fees. They also gave the underwriters a 30-day option to buy another 2.1 million or so shares if demand is there. All the shares are coming from the company itself, not from insiders cashing out. The deal is expected to close in early March 2026. Kratos says it plans to use the cash for general corporate stuff, like advancing its defense tech and funding growth. It's a classic "strengthen the balance sheet" move, but the market's first reaction is often to worry about dilution.
And look, it's not like this stock has been sitting still. Over the past 12 months, it's up a staggering 250.74%. That's the kind of run that gets everyone's attention. But right now, the stock is trading below its 20-day, 50-day, and 100-day simple moving averages. It's still above the 200-day average, which suggests the longer-term trend might still be intact, but the short-term picture looks a bit wobbly.
The technical indicators are kind of mixed, which fits the moment. The Relative Strength Index (RSI) is sitting around 46.62, which is basically neutral—not overbought, not oversold. But the MACD, another momentum indicator, is showing a bearish signal. So, you've got a stock that's had a monster year, is raising a ton of cash, and the charts are saying, "Maybe pump the brakes a little for now."
Investors will get the next official financial update from Kratos in early May 2026. The estimates for that report are looking for earnings per share to hold steady at 12 cents, while revenue is expected to jump to about $344.69 million, up from $302.60 million a year ago. The valuation, though, is eye-popping. The stock trades at a P/E ratio of over 700 times earnings. That's the kind of number that says the market is pricing in a lot of future growth, not current profits.
Analysts, for the most part, are still fans. The consensus rating is a Buy, with an average price target of $91.47, which is above where the stock was trading premarket. Just recently, Canaccord Genuity and BTIG both raised their price targets to $125 and $115, respectively, and kept their Buy ratings. However, UBS initiated coverage with a Neutral rating and a $79 target, which is below the offering price. So, there's some debate on the street about how much upside is left after the big run.
It's also worth noting where Kratos sits in the ETF world. It's a notable holding in a few funds. It makes up about 3.74% of the State Street SPDR S&P Aerospace & Defense ETF (XAR) and an even heftier 8.95% of the ARK Autonomous Technology & Robotics ETF (ARKQ). What that means is pretty straightforward: when money flows into or out of those ETFs, the funds have to buy or sell Kratos stock mechanically to match their index weights. It's an extra layer of trading pressure that has nothing to do with the company's fundamentals.
So, where does that leave us? A high-flying stock is tapping the market for a billion dollars to fund its next chapter. The immediate reaction is a sell-off on dilution fears. The long-term story might still be strong—the company is in a hot sector and expects growing sales—but the short-term path looks choppy as the market digests this new supply of shares. According to premarket data, Kratos shares were down 6.34% at $86.30 on Friday morning.
