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Kratos (KTOS) Stock Trades Down, Here Is Why

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What Happened?

Shares of aerospace and defense company Kratos (NASDAQ:KTOS) fell 3.2% in the morning session after reports indicated the German armed forces were preparing to develop long-range combat drones with the company's involvement. 

The report stated that Germany’s air force sent a request for these drones, capable of striking deep in enemy territory, and that Kratos was contributing to a concept alongside Airbus Defence. This news built on a series of positive developments for the company's flagship Valkyrie drone. Recently, the U.S. Marines transitioned a version of the Valkyrie into a program of record, which established a formal path to full-scale production. The consistent progress and key partnerships prompted positive reactions from analysts, with Stifel having previously raised its price target on the stock, citing the growing momentum.

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What Is The Market Telling Us

Kratos’s shares are very volatile and have had 29 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 5 days ago when the stock gained 4.8% on the news that the company announced a partnership with Airbus to develop a European variant of its XQ-58A Valkyrie drone. 

The collaboration aimed to deliver a combat-ready version of the uncrewed combat aircraft for the German Air Force by 2029. The Valkyrie is a low-observable drone designed for long-range missions, capable of operating independently or in tandem with manned aircraft. Under the agreement, the flight-proven Valkyrie will be equipped with a mission system made by Airbus. The partnership was seen as a significant step for Kratos, positioning it to meet the urgent demand from European customers for advanced, uncrewed combat systems. The joint project also reinforced trans-Atlantic cooperation within NATO.

Kratos is up 118% since the beginning of the year, and at $57.50 per share, it is trading close to its 52-week high of $59.77 from July 2025. Investors who bought $1,000 worth of Kratos’s shares 5 years ago would now be looking at an investment worth $3,128.

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