Kraken Robotics Faces a Defining Moment: Q1 Loss and a Game-Changing Acquisition

The next few weeks will determine whether Kraken Robotics can turn a mixed first quarter into a launchpad for a much larger enterprise. The underwater robotics specialist is on the cusp of closing its C$615 million takeover of Covelya, a deal that will roughly double the company's revenue base and reshape its financial profile. But first, the market is digesting a quarterly report that showed sales growth alongside an unexpected net loss.

The Covelya Deal Looms Large

Kraken is paying C$480 million in cash and C$135 million in common shares for Covelya, a profitable marine technology business that generated C$365 million in revenue in 2025. The acquisition is being funded by more than C$400 million in warrants. Once the deal closes, expected by the end of the second quarter 2026, the combined group will employ around 1,200 people and occupy more than 450,000 square feet of production and development space. Covelya has been growing at an average rate of 24% per year since 2023.

The real catalyst will come at closing, when management is expected to release a new guidance range for the combined entity. That forecast will reveal how much Covelya boosts Kraken's top line and margins — and whether the premium valuation can be justified.

Quarterly Results: Growth With a Blemish

In the first quarter, Kraken's revenue jumped 35% year over year to C$21.7 million, driven by a 50% surge in product sales of subsea batteries and synthetic-aperture sonar systems. New defense contracts worth around C$40 million provided additional momentum. Adjusted EBITDA came in at C$3.0 million, but the company swung to a net loss of between C$0.7 million and C$3.3 million depending on the accounting standard used. The adjusted EBITDA margin slipped from 17% to 14%.

Should investors sell immediately? Or is it worth buying Kraken Robotics?

Management blames the profit squeeze on seasonal factors and higher administrative costs tied to expanded headcount. They maintain that profitability will improve as 2026 progresses.

Orders and Infrastructure Provide a Backstop

Kraken's own order book now stands at C$97 million, up from C$87 million in April. Add Covelya's C$165 million backlog, and the combined pipeline reaches roughly C$262 million. That backlog supports the company's standalone guidance: revenue of C$165 million to C$175 million and adjusted EBITDA of C$40 million to C$50 million for the full year. At the midpoint, that implies more than 65% revenue growth and 80% EBITDA expansion.

Cash on hand of C$108.7 million gives the company a solid cushion. That liquidity also covers the financing of the Covelya acquisition, which remains on schedule.

Defense Exposure Grows

Beyond the numbers, Kraken is strengthening its position with NATO allies. The company recently participated in the SeaSEC Challenge Weeks exercise, a platform focused on protecting critical underwater infrastructure. Kraken deployed its SAS and MP-SAS systems on unmanned underwater vehicles, supporting users from Germany, the Netherlands, Finland, Denmark, Sweden and Norway. A strong performance could open the door to procurement programs — a strategic advantage that goes beyond any single contract.

Valuation: High Hopes, High Premium

The stock's rally has come at a cost. At C$7.44, Kraken trades at roughly 21.2 times sales — more than six times the industry average of 3.3. A discounted cash-flow model points to a fair value of C$6.89, suggesting the market is already pricing in a significant growth premium. Analysts remain bullish, with an average price target of C$10.80, implying about 45% upside. But that target hinges on a smooth Covelya closing and timely delivery of underwater energy solutions to defense customers.

Kraken Robotics at a turning point? This analysis reveals what investors need to know now.

In Frankfurt, the stock closed Friday at €4.74, down 2.4% on the day. The weekly performance was still positive at plus 3.3%, while year-to-date gains stand at 12.5%. Over twelve months, the share price has surged 198%. The relative strength index sits at 41, signaling a mild cooling but no oversold condition.

Technical Levels to Watch

Chart watchers see a critical support zone between €4.61 and €4.66. A break below that would open the door to the May low of €4.59. On the upside, the first resistance sits at €4.98 to €5.00, followed by late-May highs around €5.18 and €5.27.

The upcoming Covelya closing and the revised combined guidance will likely dictate the next directional move. If the integration proceeds as planned, attention will shift from the first-quarter margin compression to the broader platform that management is building for the second half of the year. If not, the current valuation leaves little room for error.

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