North America Drones:Law &Order:Special Drone Unit

We consider these recent cases to be incrementally supportive of the growingpenetration of drone services in North America although we acknowledge thatwe are still in the early stage of scaled drone deployments and that concerns onprivacy, safety and security still need to be addressed in order for the regulators gaingreater confidence in their operational feasibility.

    Domestic drone service providers such as AMZN and FLT will be likelybeneficiaries of this theme due to a combination of cabotage advantage andhigh barriers to entry thanks to the strict regulatory environment while TSGand Aeryon are two private co’s with exposure to this theme. Notably, thecabotage law establishes a natural barrier for foreign drone delivery operators,allowing AMZN to become an enabler of drone penetration in the US and FLT tocapitalize on drone delivery in Canada upon regulatory approval. Meanwhile, TSGand Aeryon have established strong relationships with local regulators, whichappear to have paved the way for them to operate in strategic sectors such as lawenforcement, energy and infrastructure on data collection and real-time analysis.

    Companies with exposures to this theme…AeroVironment (NR), Aeryon Labs (private), Amazon, AT&T, GraniteConstruction, Intel, NVIDIA, PG&E, Qualcomm, Splunk, and The Sky Guys(private) have exposure to the drone/AI theme as a revenue enabler (ie, delivery)and/or cost enhancer (ie, asset inspection). Listed Canadian companies such asDrone Delivery CA, Deveron UAS (NR), Kraken Robotics (NR) also haveexposure to the drone services theme.