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1. Kraken is a small cap Canadian piece of gold that has quietly become a critical supplier of advanced gear for underwater drones. In an age where autonomous systems are reshaping warfare, designing everything from the sensing “eyes” and power systems to entire robotic submersibles. It’s rare to find a microcap company that builds both the brains and the body of underwater robots, and that uniqueness is a core part of the thesis here. After deep research, Kraken has become one of my highest conviction ideas lately. In this autism dump, I’ll explain why I believe Kraken’s stock will be a multi bagger over the coming years, fueled largely by a game changing partnership with Anduril, a partnership that I believe the market profoundly undervalues. Company Overview: Kraken Robotics is a vertically integrated marine technology company that provides synthetic aperture sonar sensors, pressure tolerant subsea battery systems, and even complete unmanned underwater vehicles and services. In essence, Kraken makes three critical building blocks for modern undersea robotics: the “eyes” (sensors that image the seabed in extraordinary detail), the “energy” (battery packs that power the robots for long durations), and the platform (the vehicle or tow body that carries the sensors). By combining these, Kraken can offer full turnkey solutions to navies and offshore industries, a strategy that differentiates it from niche component suppliers. For example, Kraken’s flagship AquaPix SAS sonar can deliver seabed imaging with up to 30× higher resolution than conventional side scan sonar. This is not an incremental improvement but it’s a generational leap that can reveal objects (like mines or subsea cables) that older systems would miss. Meanwhile, Kraken’s sea power battery modules use a proprietary pressure tolerant design (encasing lithium cells in a flexible silicone matrix) that achieves roughly double the energy density of traditional pressure housed subsea batteries, while eliminating heavy pressure hulls. The result is much lighter, higher capacity power packs that allow underwater drones to operate for days at a time and dive to extreme depths. By developing vehicles and integration hardware (like its ThunderFish autonomous underwater vehicles and the KATFISH towed sonar platform) alongside those core components, Kraken controls multiple layers of the technology stack. Few companies in this space offer such a comprehensive portfolio. This means Kraken can capture more of the value chain per project, selling the sensor, the battery, the vehicle, and even providing survey-as-a-service while also ensures all components work together optimally. It’s a classic full stack strategy that is unusual in the maritime defense world, where incumbents often specialize in niche solutions. Crucially, Kraken’s vertical integration creates a compounding competitive advantage. Each part of Kraken’s offering reinforces the others: its SAS sensors achieve their full potential only when mounted on a stable, capable platform (like KATFISH or a long endurance AUV powered by Kraken’s batteries). By owning and fine tuning every piece, Kraken can push the performance envelope of the whole system. A vivid example is Kraken’s KATFISH: it can map the seabed at 3 cm resolution while being towed at 10 knots, a combination of speed and image quality that dramatically improves mission efficiency and is basically unmatched by rivals. Achieving that required innovation in sonar hardware, stabilization software, and platform hydrodynamics, all under one roof. This tight integration also accelerates Kraken’s R&D cycle. Improvements in one area (like a higher energy battery or a better sonar processing algorithm) can be seamlessly integrated into the full system, yielding rapid real world performance gains. Every deployment that Kraken undertakes (including its own service contracts) feeds data and feedback into this virtuous cycle of innovation. Over time, that not only widens Kraken’s technological moat but also creates high switching costs for customers. Anduril has become a strategic partner and customer of Kraken (now we’re getting to the juicy part where Kraken is almost guaranteed to double).When Anduril decided to expand into maritime autonomy, it acquired a startup called Dive Technologies in 2022 to develop large extra large unmanned submarines. Dive (now Anduril’s maritime division) found that Kraken’s SAS sonar and SeaPower batteries were the best on the market and integrated them as core components of its design. In other words, even a well funded disruptor like Anduril recognized it was better to use Kraken’s technology than reinvent it. To me, this was a huge validation: Kraken’s products are so advanced that an industry leader chose to build its flagship underwater drones around them, effectively locking Kraken in as a critical supplier. This partnership has only deepened over time and is now a linchpin of Kraken’s future growth ,I’ll dive more into it shortly, because it forms a core pillar of the bull thesis (and a potential 5× catalyst for Kraken’s market cap). Before that, it’s worth outlining why there is such a surge of interest in undersea robotics in the first place. Kraken’s opportunity exists at the intersection of defense and offshore industry trends, both of which point to an urgent need for better tools to see and operate in the oceans. On the defense side, the world’s navies are facing evolving undersea threats, from naval mines and quiet submarines to unmanned intruders ,that cannot be effectively countered with legacy approaches. A paradigm shift is underway, moving away from manned mine sweeper ships and manned sub hunters toward autonomous unmanned systems. There are over 300 specialized mine countermeasure vessels in service globally (with the majority over 20 years old). These will need replacement, and rather than build new crewed ships with risk to sailors, many navies plan to deploy unmanned systems (towed sonars, drone submersibles, etc.) that can find and neutralize mines remotely. Autonomous underwater vehicles can keep vital sea lanes clear without putting humans in harm’s way. Kraken’s SAS was purpose built as a next generation mine hunting sonar to capitalize on this shift. Its high resolution imaging and long range allow detection of very small mines or objects on the seabed that older sonars might miss, and to do so faster, a crucial advantage when you need to scan a harbor or strait quickly for threats. Kraken has already delivered SAS sensors and whole UUV systems for several NATO navy programs, often in partnership with larger defense contractors. For example, Kraken’s equipment has been used by the U.S. Navy, Canadian Navy, Royal Danish Navy, Polish Navy, and others for seabed surveillance and mine warfare trials. In fact, Kraken’s tech has been integrated or selected in over 20 different underwater vehicle platforms worldwide, including those from major defense primes. This broad adoption underscores that Kraken is becoming something of a standard for high end undersea sensing and power. Notably, Kraken is frequently specified by name in RFPs or included by multiple bidding teams in major tenders, a strong signal of customer trust. In subsea batteries, Kraken often ends up as the sole source provider for new UUV programs, because few others offer similarly advanced pressure tolerant batteries. All of this gives Kraken a quasi monopoly in certain niches (small but critical ones). Meanwhile, the geopolitical environment is adding fuel. Great power competition has a significant undersea dimension. The US navy’s latest strategic plans (for example, the 2024 CNO Navigation Plan) put heavy emphasis on fielding unmanned and autonomous systems by 2027 to maintain readiness. That timeline, essentially, to get nextgen capabilities out in the field within a few years, implies an aggressive procurement cycle for underwater drones, sensors, and supporting tech. We are already seeing this in programs like the US navy’s Lionfish small UUV program (which selected HII’s REMUS 300 drone that uses Kraken’s sonar), and in extra large AUV efforts where Anduril’s Ghost Shark (Dive-LD) is a leading contender for both U.S. and Australian navies. The sense of urgency means that companies with ready to deploy solutions stand to win big, as opposed to slow traditional development. Kraken’s products are in a sweet spot to “ride the wave” of autonomous defense spending that’s now kicking off. On the commercial side, a different catalyst is at play: the increasing need to monitor and maintain the huge infrastructure that lies under the ocean. There are over 7000 offshore oil & gas platforms, 200000+ km of subsea pipelines, 4000+ offshore wind turbines, and 1.2 million km of telecom fiber cables under water. Inspecting and protecting this infrastructure is a monumental task, traditionally done by slow crewed vessels with towed sensors or dive teams. Kraken offers a better way here too: its suite of high resolution survey sensors (SAS, subsea lidar, subbottom profilers) can map and image infrastructure faster and in greater detail, finding things like seabed shifts, scours, or suspicious objects. Kraken has even developed a robotics-as-a-Service model for the offshore sector essentially operating its own robots on contract for clients to perform surveys and inspections. This service model generates recurring revenue and also serves as “dogfooding” for Kraken (using its own gear in the field, which helps improve the products). It’s somewhat analogous to how SpaceX operates launch services while also advancing its rocket tech. Kraken’s acquisition of companies like PanGeo (for sub bottom imaging) and 3D at Depth (for laser scanning) expanded its toolkit, making it a one stop shop for seabed data. While defense is currently like 80% of Kraken’s revenue, the commercial side (20% and growing) provides diversification and a larger TAM in the long run (think global offshore wind build out etc). In short, whether for naval defense or offshore energy, Kraken addresses a common need: to see and operate underwater with greater clarity and efficiency. The confluence of defense spending uptick and offshore infrastructure investment creates powerful tailwinds for Kraken’s order book. Perhaps the most impressive indicator of Kraken’s momentum is its sales pipeline. At the start of 2024, Kraken disclosed an order pipeline of over $900 million of potential opportunities. By early 2025, that pipeline had more than doubled to like $2 billion. This is a mix of defense and commercial opportunities globally. For context, a $2B pipeline is over 20 times Kraken’s 2024 revenue, a huge multiple that reflects how much interest there is in Kraken’s niche offerings. Now, pipeline of course is not firm orders, and not all of it will convert, but even if Kraken wins a “fair share” of it, revenues could scale dramatically. We already see conversion happening: since Q4 2024, Kraken announced roughly $60 million in new subsea battery orders (likely from a combination of customers, one being a huge roughly $31M order from a single unnamed defense client which one can assume is Anduril or a similar prime). The company’s official guidance for 2025 is revenue of $120–135M (which would be 40% growth YoY) This guidance is likely anchored by existing backlog and some probability weighted new orders. Notably, Kraken expects revenue to be back half weighted (typical for defense projects). Given the pipeline and the macro drivers, it’s plausible Kraken can sustain 40% annual growth for a few years. Management even alludes to “strong long term demand drivers” targeting 40% CAGR and 20–25% EBITDA margins. If they execute on that, Kraken would reach \~$250M revenue by 2027 organically, and that might prove conservative if certain big programs ramp up. Which brings us to the core pillar of the bull thesis: Kraken’s multi year partnership with Anduril. In my view, this relationship could be truly transformational for Kraken, potentially catapulting the company from a $595M market cap today to a multi billion dollar defense player over the next 3–5 years. Here’s the story: Anduril’s maritime division (born from the Dive Technologies acquisition) has developed a line of autonomous undersea vehicles that come in different sizes. The workhorse product is often referred to as Dive-LD (large displacement AUV), also nicknamed Ghost Shark especially in the context of the royal Australian navy program. These are large robotic submarines, roughly 18+ feet long, capable of long endurance missions (reportedly 10 days or more underwater) and depths of up to 6,000 meters. They are essentially unmanned mini submarines designed for surveillance, reconnaissance, potentially even anti submarine roles, but at a fraction of the cost of a manned sub and without risking personnel. The US navy and allied navies are extremely keen on such vehicles as force multipliers. Anduril won a contract with the US navy for its XL-AUV program last year (beating out Boeing and others), and Australia has heavily funded Ghost Shark development as well. Now here’s the kicker!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Kraken is the exclusive supplier of two critical components for these Anduril AUVs, the SAS sonar system and the battery packs. Every one of Anduril’s large AUVs is “powered by Kraken” in terms of seeing and endurance. This isn’t a one off prototype deal but more like it’s a strategic supplier relationship cemented by multi year contracts. In fact, Kraken has already delivered sonar and battery for the initial Ghost Shark prototypes (the first was unveiled April 2024 in Sydney). And as of mid 2024, Anduril is moving from prototyping to production. They have broken ground on a new 100,000+ sq ft AUV manufacturing facility in Rhode Island(RIGHT NEXT TO KRAKEN HQ BY COINCIDENCE, EMPLOYING BUYERS AND NEGOTIATORS THAT WOULD DIRECTLY BE IN CHARGE OF GETTING SHIT FROM KRAKEN!!!!) set to be operational in late 2025, with a planned capacity to build up to 200 of the large Dive-LD vehicles per year. Think about it guys, 200 per year. Even if actual orders ramp to a fraction of that, it implies a scale of UUV procurement never seen before. Each Dive-LD/Ghost Shark AUV carries an estimated $2–3 million worth of Kraken components (this includes one or more AquaPix SAS sonar arrays and a suite of SeaPower battery modules). So at full 200/yr capacity, that equates to as much as \~$500M/year in potential revenue for Kraken from this one program alone. Now, I’m not saying Anduril will hit 200/year immediately ,that’s likely a peak capacity, but even a quarter of that (50 AUVs/year) would be on the order of $125M/yr to Kraken, which exceeds Kraken’s entire 2024 revenue. And it doesn’t stop there. Anduril is also developing an even larger XL-AUV (often just called Ghost Shark as well, but essentially a bigger sibling to Dive-LD). The Australian navy intends to get at least 3 of these in the prototype phase and likely many more in production. These bigger vehicles are rumored to have nearly $10 million of Kraken content each (because they might carry multiple sonars, bigger battery banks etc). The first one has already been delivered to Australia. So if those scale up (say dozens eventually fielded), that’s another huge potential chunk. Beyond the vehicles themselves, Anduril and Kraken are also collaborating on a “Seabed Sentry” concept, essentially autonomous seabed sensors (like underwater sentinels) that would use special new form factor batteries that Kraken is now developing. Kraken’s CEO has hinted that new battery designs due in late 2025 will address small/medium UUV segments and certain stationary platforms, quite possibly a nod to custom batteries for Anduril’s expanding needs. Prototype of Anduril’s Ghost Shark Extra-Large Autonomous Submarine, unveiled in 2024. Ghost Shark (also known as Dive-LD ) is an 18 foot long unmanned AUV capable of deep dives and multi week missions. Each Ghost Shark carries Kraken’s high resolution sonar and pressure tolerant battery packs as critical onboard systems. Anduril’s new factory aims to mass produce these AUVs, potentially requiring hundreds of Kraken’s sonars and batteries in the coming years. If Anduril succeeds in scaling production of these AUVs (I’m biased cuz I love Anduril and Palmer , but I think they have a real nice shot), Kraken’s revenue could skyrocket in tandem. There are a few qualitative points to emphasize here as well: Locked In Supplier Status: Sometimes one might worry “what if Anduril switches to another supplier or builds its own sonar?” But in defense, once a technology is integrated and tested in prototypes, switching is very costly in time and risk. Navies demand reliability (“battle tested” gear) and won’t be keen on Anduril swapping out critical components last minute. Kraken’s sonar and battery were chosen after competitive evaluations, ripping them out would delay the program by years (there’s a hard 2027 readiness goal the Navy is eyeing). Moreover, HII (another big defense company via its Hydroid subsidiary) also uses Kraken’s tech in their UUVs ,so Kraken is in both of the major US pathways for unmanned subs (Anduril and HII). That means no matter if the Pentagon spreads orders between Anduril and, say, HII’s REMUS line (which it likely will to diversify suppliers, akin to how NASA split contracts between SpaceX and Boeing), Kraken wins either way because both lines rely on Kraken’s components. This is a beautiful position to be in. It creates a strong “moat” around those revenue streams. In fact, Kraken’s role in these programs is a textbook example of a supplier lock in, the company is so entrenched that it’s basically part of Anduril’s product DNA now. For Anduril to change course would not only cause delays but also make them more dependent on unproven tech, which is unlikely given the time crunch. The company announced it’s building a new battery production facility in Nova Scotia that will triple its current battery output capacity by late 2025. According to Kraken, this new plant will have multiple 6,000m pressure test bays and will increase subsea battery production capacity to almost $200 million annually once fully operational. That implies the ability to produce on the order of 3X the batteries it can today, a direct response to anticipated demand from programs like Anduril’s. Kraken’s CEO Greg Reid even stated that new battery form factors (due in 2025) will allow Kraken to address segments of the UUV market they couldn’t before, indicating they’re co developing solutions with big customers. In short, Kraken is gearing up its supply chain just in time for the Anduril opportunity. The pieces are falling into place for a potentially explosive ramp in revenue if large orders hit. To put some numbers on the Anduril impact: Let’s imagine a scenario by 2027. If Anduril and other programs ramp as anticipated, Kraken could be supplying, say, 100 Dive-LD vehicles per year (which is only 50% of Anduril’s stated capacity) and perhaps 10 of the larger Ghost Shark XL-AUVs per year, plus miscellaneous smaller vehicle battery sales. Using midpoint estimates, 100 Dive-LDs × $2.5M each = $250M, and 10 Ghost Sharks × $10M each = $100M. That’s $350M in annual revenue from Anduril related business alone. Now add Kraken’s other segments: perhaps another $100–150M from traditional naval SAS sales, KATFISH systems, services, etc. This yields a potential $450–500M revenue in a few years, which would be roughly 5× Kraken’s 2024 revenue. Even if that exact scenario doesn’t fully materialize, the direction is clear ,Kraken has a line of sight to several fold increase in revenue if the big defense customers execute on current plans. Crucially, this growth would also be high margin: product revenues like sonar and batteries come with 50% gross margins, and with scaling, Kraken’s EBITDA margins should push towards 25-30%. Let’s say, conservatively, by 2027 Kraken could be doing $400M revenue with 25% EBITDA margin. That’s $100M EBITDA. With minimal interest (the company has little debt) and a normal tax rate, net income might be around $70–80M (this assumes some economies and possibly 18-20% net margin). A company growing revenues \~30-40% and in a strategic defense niche could easily command a P/E of 20–25x. At 20× $75M net, that’s a \~$1.5 billion market cap. At 25×, nearly $1.9B. In CAD that would be around $2–2.5B, which is literally 4–5× Kraken’s current market cap!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! This aligns with my view that Kraken’s Anduril partnership has the potential to 5× the company’s value in a successful bull case. And note, this doesn’t even assume the full 200/year production or any crazy optimistic scenario, it’s using half capacity. If things really went into overdrive, the upside could be higher. Even without the full Anduril boost, Kraken has room for a double in the next couple of years!!!! as it executes on existing business. To simplify: Kraken’s SAS sonars and SeaPower batteries are, by all accounts, among the top performers globally. They offer capabilities (resolution, range, energy density) that legacy systems can’t match. This has led to Kraken being designed into numerous defense programs as either a preferred or sole source supplier. High performance products with proven field results give Kraken a degree of pricing power and protect its 50% margins. The technology is also protected by patents and deep know how (the battery tech especially has a moat due to its unique pressure tolerant chemistry). In niches like SAS, the competition is mainly a few large defense contractors who aren’t as focused on this niche. Integrated “Full Stack” Solutions: Kraken’s vertical integration (sensors + power + vehicles + data services) is a major differentiator. Think of it as a mini prime contractor: it can deliver a complete system to a navy like a mine hunting package that includes the drone, the sonar, the launch system, training, and ongoing support. It means each customer win can pull through multiple product lines (selling more per contract). Competitors who only do one piece (say just the sonar) might partner with others, but Kraken by having more pieces in house can move faster and ensure the sum is greater than parts. This cross disciplinary approach also fosters continuous innovation as mentioned earlier. Massive Market Opportunity & Pipeline: External factors are driving a secular upswing in undersea spending. Geopolitical tensions have put focus on naval strength and undersea capabilities (intelligence gathering, anti submarine warfare, mine warfare). Additionally, as mentioned, offshore renewable energy and telecom expansions drive need for seabed mapping. Kraken’s >C$2B pipeline reflects this robust demand. The company has already converted pipeline to record backlog. Many NATO programs are either in procurement or soon to be (the US alone is looking at possibly hundreds of small/medium AUVs and dozens of larger ones by 2030). Kraken, with reference wins in 30+ countries and partnerships with giants, is well positioned to capture a significant chunk of these upcoming contracts. Simply put, the pie is growing and Kraken is one of the few with a seat at the table for the high end segments. Strategic Value / M&A Angle: This is more speculative, but Kraken’s unique capabilities could make it an attractive takeover target eventually. Large defense contractors might find it easier to buy Kraken to instantly acquire its IP in SAS and battery tech, rather than develop their own. For instance, a Lockheed or Raytheon could conceivably pay a premium to fold Kraken into their portfolio and get a jump in undersea tech. Alternatively, Anduril itself, as it grows, might even consider acquiring Kraken if it ever made sense (though Anduril seems content to let Kraken operate as a supplier for now). Kraken’s tech has become almost “mission critical” for certain next gen systems, which gives it strategic importance beyond its size. I generally prefer Kraken to remain independent and grow as a “mini prime” in its own right, but investors should recognize that as Kraken scales and proves out its role, it might attract suitors. Even the speculation of this could help the stock’s valuation (we saw, for example, small defense tech firms like Aerojet command high takeover premiums due to scarcity of such assets). So there’s a potential backstop or upside kicker in a buyout scenario. Given all these positives, one must ask: Why does this opportunity exist? In other words, if Kraken is so great, why is it still a $2 stock and not widely discovered? I have a few thoughts on that, which double as the risks and counterarguments to watch: Lumpy contracts and execution risk: Kraken’s revenue can be uneven because it depends on big contracts. A single slip in the timing of a navy contract award could cause a quarterly miss or a slower year. This volatility might scare some investors who prefer steady revenues. In 2023, for instance, Kraken’s sensor product revenue dipped slightly after strong growth prior, which might have worried people, but it was largely timing of orders. The pipeline suggests the overall trend is up, but quarter to quarter, lumpiness is inherent in defense. *I*’m comfortable with this volatility, as long as the long term trajectory is intact. Kraken has mitigated some of it by diversifying (defense vs services vs commercial) and by working as a sub contractor to bigger players who often smooth out delivery schedules. Customer Concentration & Competition: With Anduril projected to become a huge part of the business, Kraken will have customer concentration risk. If something happened to Anduril’s program, Kraken would feel the pain. Additionally, success might breed competition, big players could try to build similar SAS or batteries. My autistic view: the Anduril risk is mitigated by Kraken also being in HII’s and others’ programs (so not a single point of failure). And an Anduril collapse is unlikely given their strong funding and pentagon support, if anything, they are on an upward trajectory. On competition, developing a cutting edge SAS or deep sea battery is not trivial, Kraken has a \~5-10 year head start and field experience. New entrants would face high barriers (plus navies tend to stick with proven tech, “battle-tested” is a real moat). Also, Kraken often teams up with larger primes on bids, turning potential competitors into partners. For example, Kraken’s sonar might be offered by multiple integrators in a tender, so even if Kraken isn’t prime, its product can win through multiple channels. Still, this is an area to watch, I wouldn’t want, say, a new breakthrough sonar to suddenly leapfrog Kraken. Kraken is still a micro cap stock, with limited analyst coverage and mostly retail investors so far. This lack of visibility is precisely why an inefficiency exists ,many institutional investors don’t know it or can’t buy it yet. But this is changing. The Deep Sail Capital Q2 2024 letter publicly highlighted Kraken, which brought new eyes. The recent big equity raise likely brought some institutions into the shareholder list. And I suspect if Kraken continues to deliver financial results and secures one of those marquee contracts (like a large US navy order via Anduril or similar), it will force a lot more coverage. So while illiquidity and low profile have been a drag, I view the likely trajectory as moving from “under the radar” to “on radar”. As an early investor, it makes me horny. We are so fucking early. To summarize, Kraken Robotics is a fucking hot asymmetric bet in my view. On the downside, the risks are manageable (and largely around execution timing, which the recent cash infusion helps buffer). On the upside, we have multiple ways to win: organic growth from the existing product portfolio, a likely rerating as the company graduates from micro cap bs, and the big kicker of Anduril driven scale. At today’s valuation, we’re essentially paying a modest multiple for Kraken’s current business and getting a potential Anduril explosion for free. My base case sees Kraken doubling as it achieves its 2025/2026 targets and the market rewards its growth. My bull case, factoring a successful Anduril ramp, sees Kraken’s market cap eventually in the $2–3 billion range .Could it take a few years? Certainly, defense programs don’t happen overnight. 2027 is not far off, and that’s the timeframe when many of these unmanned systems are slated for deployment.Of course, I will continue to monitor how the thesis progresses. Key things I’m watching in the next 6-12 months: any major contract announcements (like a multi year battery supply deal from Anduril or a NATO navy signing on for Kraken’s systems), the execution on 2025 guidance (hitting that 40% growth will build credibility), and developments on the US front (will Kraken’s kit be in the US navy’s upcoming programs formally, signs are pointing yes, with Lionfish and others). Also, if Kraken can achieve a NASDAQ listing, that could bring in a huge flood of new investors. But even without that, the fundamentals should drive the value. In conclusion, Kraken represents a rare convergence of cutting edge tech, accelerating financials, and powerful macro tailwinds, yet remains mispriced due to retarded market. If you have any questions, ask in comments

1. Kraken is a small cap Canadian piece of gold that has quietly become a critical supplier of advanced gear for underwater drones. In an age where autonomous systems are reshaping warfare, designing everything from the sensing “eyes” and power systems to entire robotic submersibles. It’s rare to find a microcap company that builds both the brains and the body of underwater robots, and that uniqueness is a core part of the thesis here. After deep research, Kraken has become one of my highest conviction ideas lately. In this autism dump, I’ll explain why I believe Kraken’s stock will be a multi bagger over the coming years, fueled largely by a game changing partnership with Anduril, a partnership that I believe the market profoundly undervalues. Company Overview: Kraken Robotics is a vertically integrated marine technology company that provides synthetic aperture sonar sensors, pressure tolerant subsea battery systems, and even complete unmanned underwater vehicles and services. In essence, Kraken makes three critical building blocks for modern undersea robotics: the “eyes” (sensors that image the seabed in extraordinary detail), the “energy” (battery packs that power the robots for long durations), and the platform (the vehicle or tow body that carries the sensors). By combining these, Kraken can offer full turnkey solutions to navies and offshore industries, a strategy that differentiates it from niche component suppliers. For example, Kraken’s flagship AquaPix SAS sonar can deliver seabed imaging with up to 30× higher resolution than conventional side scan sonar. This is not an incremental improvement but it’s a generational leap that can reveal objects (like mines or subsea cables) that older systems would miss. Meanwhile, Kraken’s sea power battery modules use a proprietary pressure tolerant design (encasing lithium cells in a flexible silicone matrix) that achieves roughly double the energy density of traditional pressure housed subsea batteries, while eliminating heavy pressure hulls. The result is much lighter, higher capacity power packs that allow underwater drones to operate for days at a time and dive to extreme depths. By developing vehicles and integration hardware (like its ThunderFish autonomous underwater vehicles and the KATFISH towed sonar platform) alongside those core components, Kraken controls multiple layers of the technology stack. Few companies in this space offer such a comprehensive portfolio. This means Kraken can capture more of the value chain per project, selling the sensor, the battery, the vehicle, and even providing survey-as-a-service while also ensures all components work together optimally. It’s a classic full stack strategy that is unusual in the maritime defense world, where incumbents often specialize in niche solutions. Crucially, Kraken’s vertical integration creates a compounding competitive advantage. Each part of Kraken’s offering reinforces the others: its SAS sensors achieve their full potential only when mounted on a stable, capable platform (like KATFISH or a long endurance AUV powered by Kraken’s batteries). By owning and fine tuning every piece, Kraken can push the performance envelope of the whole system. A vivid example is Kraken’s KATFISH: it can map the seabed at 3 cm resolution while being towed at 10 knots, a combination of speed and image quality that dramatically improves mission efficiency and is basically unmatched by rivals. Achieving that required innovation in sonar hardware, stabilization software, and platform hydrodynamics, all under one roof. This tight integration also accelerates Kraken’s R&D cycle. Improvements in one area (like a higher energy battery or a better sonar processing algorithm) can be seamlessly integrated into the full system, yielding rapid real world performance gains. Every deployment that Kraken undertakes (including its own service contracts) feeds data and feedback into this virtuous cycle of innovation. Over time, that not only widens Kraken’s technological moat but also creates high switching costs for customers. Anduril has become a strategic partner and customer of Kraken (now we’re getting to the juicy part where Kraken is almost guaranteed to double).When Anduril decided to expand into maritime autonomy, it acquired a startup called Dive Technologies in 2022 to develop large extra large unmanned submarines. Dive (now Anduril’s maritime division) found that Kraken’s SAS sonar and SeaPower batteries were the best on the market and integrated them as core components of its design. In other words, even a well funded disruptor like Anduril recognized it was better to use Kraken’s technology than reinvent it. To me, this was a huge validation: Kraken’s products are so advanced that an industry leader chose to build its flagship underwater drones around them, effectively locking Kraken in as a critical supplier. This partnership has only deepened over time and is now a linchpin of Kraken’s future growth ,I’ll dive more into it shortly, because it forms a core pillar of the bull thesis (and a potential 5× catalyst for Kraken’s market cap). Before that, it’s worth outlining why there is such a surge of interest in undersea robotics in the first place. Kraken’s opportunity exists at the intersection of defense and offshore industry trends, both of which point to an urgent need for better tools to see and operate in the oceans. On the defense side, the world’s navies are facing evolving undersea threats, from naval mines and quiet submarines to unmanned intruders ,that cannot be effectively countered with legacy approaches. A paradigm shift is underway, moving away from manned mine sweeper ships and manned sub hunters toward autonomous unmanned systems. There are over 300 specialized mine countermeasure vessels in service globally (with the majority over 20 years old). These will need replacement, and rather than build new crewed ships with risk to sailors, many navies plan to deploy unmanned systems (towed sonars, drone submersibles, etc.) that can find and neutralize mines remotely. Autonomous underwater vehicles can keep vital sea lanes clear without putting humans in harm’s way. Kraken’s SAS was purpose built as a next generation mine hunting sonar to capitalize on this shift. Its high resolution imaging and long range allow detection of very small mines or objects on the seabed that older sonars might miss, and to do so faster, a crucial advantage when you need to scan a harbor or strait quickly for threats. Kraken has already delivered SAS sensors and whole UUV systems for several NATO navy programs, often in partnership with larger defense contractors. For example, Kraken’s equipment has been used by the U.S. Navy, Canadian Navy, Royal Danish Navy, Polish Navy, and others for seabed surveillance and mine warfare trials. In fact, Kraken’s tech has been integrated or selected in over 20 different underwater vehicle platforms worldwide, including those from major defense primes. This broad adoption underscores that Kraken is becoming something of a standard for high end undersea sensing and power. Notably, Kraken is frequently specified by name in RFPs or included by multiple bidding teams in major tenders, a strong signal of customer trust. In subsea batteries, Kraken often ends up as the sole source provider for new UUV programs, because few others offer similarly advanced pressure tolerant batteries. All of this gives Kraken a quasi monopoly in certain niches (small but critical ones). Meanwhile, the geopolitical environment is adding fuel. Great power competition has a significant undersea dimension. The US navy’s latest strategic plans (for example, the 2024 CNO Navigation Plan) put heavy emphasis on fielding unmanned and autonomous systems by 2027 to maintain readiness. That timeline, essentially, to get nextgen capabilities out in the field within a few years, implies an aggressive procurement cycle for underwater drones, sensors, and supporting tech. We are already seeing this in programs like the US navy’s Lionfish small UUV program (which selected HII’s REMUS 300 drone that uses Kraken’s sonar), and in extra large AUV efforts where Anduril’s Ghost Shark (Dive-LD) is a leading contender for both U.S. and Australian navies. The sense of urgency means that companies with ready to deploy solutions stand to win big, as opposed to slow traditional development. Kraken’s products are in a sweet spot to “ride the wave” of autonomous defense spending that’s now kicking off. On the commercial side, a different catalyst is at play: the increasing need to monitor and maintain the huge infrastructure that lies under the ocean. There are over 7000 offshore oil & gas platforms, 200000+ km of subsea pipelines, 4000+ offshore wind turbines, and 1.2 million km of telecom fiber cables under water. Inspecting and protecting this infrastructure is a monumental task, traditionally done by slow crewed vessels with towed sensors or dive teams. Kraken offers a better way here too: its suite of high resolution survey sensors (SAS, subsea lidar, subbottom profilers) can map and image infrastructure faster and in greater detail, finding things like seabed shifts, scours, or suspicious objects. Kraken has even developed a robotics-as-a-Service model for the offshore sector essentially operating its own robots on contract for clients to perform surveys and inspections. This service model generates recurring revenue and also serves as “dogfooding” for Kraken (using its own gear in the field, which helps improve the products). It’s somewhat analogous to how SpaceX operates launch services while also advancing its rocket tech. Kraken’s acquisition of companies like PanGeo (for sub bottom imaging) and 3D at Depth (for laser scanning) expanded its toolkit, making it a one stop shop for seabed data. While defense is currently like 80% of Kraken’s revenue, the commercial side (20% and growing) provides diversification and a larger TAM in the long run (think global offshore wind build out etc). In short, whether for naval defense or offshore energy, Kraken addresses a common need: to see and operate underwater with greater clarity and efficiency. The confluence of defense spending uptick and offshore infrastructure investment creates powerful tailwinds for Kraken’s order book. Perhaps the most impressive indicator of Kraken’s momentum is its sales pipeline. At the start of 2024, Kraken disclosed an order pipeline of over $900 million of potential opportunities. By early 2025, that pipeline had more than doubled to like $2 billion. This is a mix of defense and commercial opportunities globally. For context, a $2B pipeline is over 20 times Kraken’s 2024 revenue, a huge multiple that reflects how much interest there is in Kraken’s niche offerings. Now, pipeline of course is not firm orders, and not all of it will convert, but even if Kraken wins a “fair share” of it, revenues could scale dramatically. We already see conversion happening: since Q4 2024, Kraken announced roughly $60 million in new subsea battery orders (likely from a combination of customers, one being a huge roughly $31M order from a single unnamed defense client which one can assume is Anduril or a similar prime). The company’s official guidance for 2025 is revenue of $120–135M (which would be 40% growth YoY) This guidance is likely anchored by existing backlog and some probability weighted new orders. Notably, Kraken expects revenue to be back half weighted (typical for defense projects). Given the pipeline and the macro drivers, it’s plausible Kraken can sustain 40% annual growth for a few years. Management even alludes to “strong long term demand drivers” targeting 40% CAGR and 20–25% EBITDA margins. If they execute on that, Kraken would reach \~$250M revenue by 2027 organically, and that might prove conservative if certain big programs ramp up. Which brings us to the core pillar of the bull thesis: Kraken’s multi year partnership with Anduril. In my view, this relationship could be truly transformational for Kraken, potentially catapulting the company from a $595M market cap today to a multi billion dollar defense player over the next 3–5 years. Here’s the story: Anduril’s maritime division (born from the Dive Technologies acquisition) has developed a line of autonomous undersea vehicles that come in different sizes. The workhorse product is often referred to as Dive-LD (large displacement AUV), also nicknamed Ghost Shark especially in the context of the royal Australian navy program. These are large robotic submarines, roughly 18+ feet long, capable of long endurance missions (reportedly 10 days or more underwater) and depths of up to 6,000 meters. They are essentially unmanned mini submarines designed for surveillance, reconnaissance, potentially even anti submarine roles, but at a fraction of the cost of a manned sub and without risking personnel. The US navy and allied navies are extremely keen on such vehicles as force multipliers. Anduril won a contract with the US navy for its XL-AUV program last year (beating out Boeing and others), and Australia has heavily funded Ghost Shark development as well. Now here’s the kicker!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Kraken is the exclusive supplier of two critical components for these Anduril AUVs, the SAS sonar system and the battery packs. Every one of Anduril’s large AUVs is “powered by Kraken” in terms of seeing and endurance. This isn’t a one off prototype deal but more like it’s a strategic supplier relationship cemented by multi year contracts. In fact, Kraken has already delivered sonar and battery for the initial Ghost Shark prototypes (the first was unveiled April 2024 in Sydney). And as of mid 2024, Anduril is moving from prototyping to production. They have broken ground on a new 100,000+ sq ft AUV manufacturing facility in Rhode Island(RIGHT NEXT TO KRAKEN HQ BY COINCIDENCE, EMPLOYING BUYERS AND NEGOTIATORS THAT WOULD DIRECTLY BE IN CHARGE OF GETTING SHIT FROM KRAKEN!!!!) set to be operational in late 2025, with a planned capacity to build up to 200 of the large Dive-LD vehicles per year. Think about it guys, 200 per year. Even if actual orders ramp to a fraction of that, it implies a scale of UUV procurement never seen before. Each Dive-LD/Ghost Shark AUV carries an estimated $2–3 million worth of Kraken components (this includes one or more AquaPix SAS sonar arrays and a suite of SeaPower battery modules). So at full 200/yr capacity, that equates to as much as \~$500M/year in potential revenue for Kraken from this one program alone. Now, I’m not saying Anduril will hit 200/year immediately ,that’s likely a peak capacity, but even a quarter of that (50 AUVs/year) would be on the order of $125M/yr to Kraken, which exceeds Kraken’s entire 2024 revenue. And it doesn’t stop there. Anduril is also developing an even larger XL-AUV (often just called Ghost Shark as well, but essentially a bigger sibling to Dive-LD). The Australian navy intends to get at least 3 of these in the prototype phase and likely many more in production. These bigger vehicles are rumored to have nearly $10 million of Kraken content each (because they might carry multiple sonars, bigger battery banks etc). The first one has already been delivered to Australia. So if those scale up (say dozens eventually fielded), that’s another huge potential chunk. Beyond the vehicles themselves, Anduril and Kraken are also collaborating on a “Seabed Sentry” concept, essentially autonomous seabed sensors (like underwater sentinels) that would use special new form factor batteries that Kraken is now developing. Kraken’s CEO has hinted that new battery designs due in late 2025 will address small/medium UUV segments and certain stationary platforms, quite possibly a nod to custom batteries for Anduril’s expanding needs. Prototype of Anduril’s Ghost Shark Extra-Large Autonomous Submarine, unveiled in 2024. Ghost Shark (also known as Dive-LD ) is an 18 foot long unmanned AUV capable of deep dives and multi week missions. Each Ghost Shark carries Kraken’s high resolution sonar and pressure tolerant battery packs as critical onboard systems. Anduril’s new factory aims to mass produce these AUVs, potentially requiring hundreds of Kraken’s sonars and batteries in the coming years. If Anduril succeeds in scaling production of these AUVs (I’m biased cuz I love Anduril and Palmer , but I think they have a real nice shot), Kraken’s revenue could skyrocket in tandem. There are a few qualitative points to emphasize here as well: Locked In Supplier Status: Sometimes one might worry “what if Anduril switches to another supplier or builds its own sonar?” But in defense, once a technology is integrated and tested in prototypes, switching is very costly in time and risk. Navies demand reliability (“battle tested” gear) and won’t be keen on Anduril swapping out critical components last minute. Kraken’s sonar and battery were chosen after competitive evaluations, ripping them out would delay the program by years (there’s a hard 2027 readiness goal the Navy is eyeing). Moreover, HII (another big defense company via its Hydroid subsidiary) also uses Kraken’s tech in their UUVs ,so Kraken is in both of the major US pathways for unmanned subs (Anduril and HII). That means no matter if the Pentagon spreads orders between Anduril and, say, HII’s REMUS line (which it likely will to diversify suppliers, akin to how NASA split contracts between SpaceX and Boeing), Kraken wins either way because both lines rely on Kraken’s components. This is a beautiful position to be in. It creates a strong “moat” around those revenue streams. In fact, Kraken’s role in these programs is a textbook example of a supplier lock in, the company is so entrenched that it’s basically part of Anduril’s product DNA now. For Anduril to change course would not only cause delays but also make them more dependent on unproven tech, which is unlikely given the time crunch. The company announced it’s building a new battery production facility in Nova Scotia that will triple its current battery output capacity by late 2025. According to Kraken, this new plant will have multiple 6,000m pressure test bays and will increase subsea battery production capacity to almost $200 million annually once fully operational. That implies the ability to produce on the order of 3X the batteries it can today, a direct response to anticipated demand from programs like Anduril’s. Kraken’s CEO Greg Reid even stated that new battery form factors (due in 2025) will allow Kraken to address segments of the UUV market they couldn’t before, indicating they’re co developing solutions with big customers. In short, Kraken is gearing up its supply chain just in time for the Anduril opportunity. The pieces are falling into place for a potentially explosive ramp in revenue if large orders hit. To put some numbers on the Anduril impact: Let’s imagine a scenario by 2027. If Anduril and other programs ramp as anticipated, Kraken could be supplying, say, 100 Dive-LD vehicles per year (which is only 50% of Anduril’s stated capacity) and perhaps 10 of the larger Ghost Shark XL-AUVs per year, plus miscellaneous smaller vehicle battery sales. Using midpoint estimates, 100 Dive-LDs × $2.5M each = $250M, and 10 Ghost Sharks × $10M each = $100M. That’s $350M in annual revenue from Anduril related business alone. Now add Kraken’s other segments: perhaps another $100–150M from traditional naval SAS sales, KATFISH systems, services, etc. This yields a potential $450–500M revenue in a few years, which would be roughly 5× Kraken’s 2024 revenue. Even if that exact scenario doesn’t fully materialize, the direction is clear ,Kraken has a line of sight to several fold increase in revenue if the big defense customers execute on current plans. Crucially, this growth would also be high margin: product revenues like sonar and batteries come with 50% gross margins, and with scaling, Kraken’s EBITDA margins should push towards 25-30%. Let’s say, conservatively, by 2027 Kraken could be doing $400M revenue with 25% EBITDA margin. That’s $100M EBITDA. With minimal interest (the company has little debt) and a normal tax rate, net income might be around $70–80M (this assumes some economies and possibly 18-20% net margin). A company growing revenues \~30-40% and in a strategic defense niche could easily command a P/E of 20–25x. At 20× $75M net, that’s a \~$1.5 billion market cap. At 25×, nearly $1.9B. In CAD that would be around $2–2.5B, which is literally 4–5× Kraken’s current market cap!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! This aligns with my view that Kraken’s Anduril partnership has the potential to 5× the company’s value in a successful bull case. And note, this doesn’t even assume the full 200/year production or any crazy optimistic scenario, it’s using half capacity. If things really went into overdrive, the upside could be higher. Even without the full Anduril boost, Kraken has room for a double in the next couple of years!!!! as it executes on existing business. To simplify: Kraken’s SAS sonars and SeaPower batteries are, by all accounts, among the top performers globally. They offer capabilities (resolution, range, energy density) that legacy systems can’t match. This has led to Kraken being designed into numerous defense programs as either a preferred or sole source supplier. High performance products with proven field results give Kraken a degree of pricing power and protect its 50% margins. The technology is also protected by patents and deep know how (the battery tech especially has a moat due to its unique pressure tolerant chemistry). In niches like SAS, the competition is mainly a few large defense contractors who aren’t as focused on this niche. Integrated “Full Stack” Solutions: Kraken’s vertical integration (sensors + power + vehicles + data services) is a major differentiator. Think of it as a mini prime contractor: it can deliver a complete system to a navy like a mine hunting package that includes the drone, the sonar, the launch system, training, and ongoing support. It means each customer win can pull through multiple product lines (selling more per contract). Competitors who only do one piece (say just the sonar) might partner with others, but Kraken by having more pieces in house can move faster and ensure the sum is greater than parts. This cross disciplinary approach also fosters continuous innovation as mentioned earlier. Massive Market Opportunity & Pipeline: External factors are driving a secular upswing in undersea spending. Geopolitical tensions have put focus on naval strength and undersea capabilities (intelligence gathering, anti submarine warfare, mine warfare). Additionally, as mentioned, offshore renewable energy and telecom expansions drive need for seabed mapping. Kraken’s >C$2B pipeline reflects this robust demand. The company has already converted pipeline to record backlog. Many NATO programs are either in procurement or soon to be (the US alone is looking at possibly hundreds of small/medium AUVs and dozens of larger ones by 2030). Kraken, with reference wins in 30+ countries and partnerships with giants, is well positioned to capture a significant chunk of these upcoming contracts. Simply put, the pie is growing and Kraken is one of the few with a seat at the table for the high end segments. Strategic Value / M&A Angle: This is more speculative, but Kraken’s unique capabilities could make it an attractive takeover target eventually. Large defense contractors might find it easier to buy Kraken to instantly acquire its IP in SAS and battery tech, rather than develop their own. For instance, a Lockheed or Raytheon could conceivably pay a premium to fold Kraken into their portfolio and get a jump in undersea tech. Alternatively, Anduril itself, as it grows, might even consider acquiring Kraken if it ever made sense (though Anduril seems content to let Kraken operate as a supplier for now). Kraken’s tech has become almost “mission critical” for certain next gen systems, which gives it strategic importance beyond its size. I generally prefer Kraken to remain independent and grow as a “mini prime” in its own right, but investors should recognize that as Kraken scales and proves out its role, it might attract suitors. Even the speculation of this could help the stock’s valuation (we saw, for example, small defense tech firms like Aerojet command high takeover premiums due to scarcity of such assets). So there’s a potential backstop or upside kicker in a buyout scenario. Given all these positives, one must ask: Why does this opportunity exist? In other words, if Kraken is so great, why is it still a $2 stock and not widely discovered? I have a few thoughts on that, which double as the risks and counterarguments to watch: Lumpy contracts and execution risk: Kraken’s revenue can be uneven because it depends on big contracts. A single slip in the timing of a navy contract award could cause a quarterly miss or a slower year. This volatility might scare some investors who prefer steady revenues. In 2023, for instance, Kraken’s sensor product revenue dipped slightly after strong growth prior, which might have worried people, but it was largely timing of orders. The pipeline suggests the overall trend is up, but quarter to quarter, lumpiness is inherent in defense. *I*’m comfortable with this volatility, as long as the long term trajectory is intact. Kraken has mitigated some of it by diversifying (defense vs services vs commercial) and by working as a sub contractor to bigger players who often smooth out delivery schedules. Customer Concentration & Competition: With Anduril projected to become a huge part of the business, Kraken will have customer concentration risk. If something happened to Anduril’s program, Kraken would feel the pain. Additionally, success might breed competition, big players could try to build similar SAS or batteries. My autistic view: the Anduril risk is mitigated by Kraken also being in HII’s and others’ programs (so not a single point of failure). And an Anduril collapse is unlikely given their strong funding and pentagon support, if anything, they are on an upward trajectory. On competition, developing a cutting edge SAS or deep sea battery is not trivial, Kraken has a \~5-10 year head start and field experience. New entrants would face high barriers (plus navies tend to stick with proven tech, “battle-tested” is a real moat). Also, Kraken often teams up with larger primes on bids, turning potential competitors into partners. For example, Kraken’s sonar might be offered by multiple integrators in a tender, so even if Kraken isn’t prime, its product can win through multiple channels. Still, this is an area to watch, I wouldn’t want, say, a new breakthrough sonar to suddenly leapfrog Kraken. Kraken is still a micro cap stock, with limited analyst coverage and mostly retail investors so far. This lack of visibility is precisely why an inefficiency exists ,many institutional investors don’t know it or can’t buy it yet. But this is changing. The Deep Sail Capital Q2 2024 letter publicly highlighted Kraken, which brought new eyes. The recent big equity raise likely brought some institutions into the shareholder list. And I suspect if Kraken continues to deliver financial results and secures one of those marquee contracts (like a large US navy order via Anduril or similar), it will force a lot more coverage. So while illiquidity and low profile have been a drag, I view the likely trajectory as moving from “under the radar” to “on radar”. As an early investor, it makes me horny. We are so fucking early. To summarize, Kraken Robotics is a fucking hot asymmetric bet in my view. On the downside, the risks are manageable (and largely around execution timing, which the recent cash infusion helps buffer). On the upside, we have multiple ways to win: organic growth from the existing product portfolio, a likely rerating as the company graduates from micro cap bs, and the big kicker of Anduril driven scale. At today’s valuation, we’re essentially paying a modest multiple for Kraken’s current business and getting a potential Anduril explosion for free. My base case sees Kraken doubling as it achieves its 2025/2026 targets and the market rewards its growth. My bull case, factoring a successful Anduril ramp, sees Kraken’s market cap eventually in the $2–3 billion range .Could it take a few years? Certainly, defense programs don’t happen overnight. 2027 is not far off, and that’s the timeframe when many of these unmanned systems are slated for deployment.Of course, I will continue to monitor how the thesis progresses. Key things I’m watching in the next 6-12 months: any major contract announcements (like a multi year battery supply deal from Anduril or a NATO navy signing on for Kraken’s systems), the execution on 2025 guidance (hitting that 40% growth will build credibility), and developments on the US front (will Kraken’s kit be in the US navy’s upcoming programs formally, signs are pointing yes, with Lionfish and others). Also, if Kraken can achieve a NASDAQ listing, that could bring in a huge flood of new investors. But even without that, the fundamentals should drive the value. In conclusion, Kraken represents a rare convergence of cutting edge tech, accelerating financials, and powerful macro tailwinds, yet remains mispriced due to retarded market. If you have any questions, ask in comments

1. Kraken is a small cap Canadian piece of gold that has quietly become a critical supplier of advanced gear for underwater drones. In an age where autonomous systems are reshaping warfare, designing everything from the sensing “eyes” and power systems to entire robotic submersibles. It’s rare to find a microcap company that builds both the brains and the body of underwater robots, and that uniqueness is a core part of the thesis here. After deep research, Kraken has become one of my highest conviction ideas lately. In this autism dump, I’ll explain why I believe Kraken’s stock will be a multi bagger over the coming years, fueled largely by a game changing partnership with Anduril, a partnership that I believe the market profoundly undervalues. Company Overview: Kraken Robotics is a vertically integrated marine technology company that provides synthetic aperture sonar sensors, pressure tolerant subsea battery systems, and even complete unmanned underwater vehicles and services. In essence, Kraken makes three critical building blocks for modern undersea robotics: the “eyes” (sensors that image the seabed in extraordinary detail), the “energy” (battery packs that power the robots for long durations), and the platform (the vehicle or tow body that carries the sensors). By combining these, Kraken can offer full turnkey solutions to navies and offshore industries, a strategy that differentiates it from niche component suppliers. For example, Kraken’s flagship AquaPix SAS sonar can deliver seabed imaging with up to 30× higher resolution than conventional side scan sonar. This is not an incremental improvement but it’s a generational leap that can reveal objects (like mines or subsea cables) that older systems would miss. Meanwhile, Kraken’s sea power battery modules use a proprietary pressure tolerant design (encasing lithium cells in a flexible silicone matrix) that achieves roughly double the energy density of traditional pressure housed subsea batteries, while eliminating heavy pressure hulls. The result is much lighter, higher capacity power packs that allow underwater drones to operate for days at a time and dive to extreme depths. By developing vehicles and integration hardware (like its ThunderFish autonomous underwater vehicles and the KATFISH towed sonar platform) alongside those core components, Kraken controls multiple layers of the technology stack. Few companies in this space offer such a comprehensive portfolio. This means Kraken can capture more of the value chain per project, selling the sensor, the battery, the vehicle, and even providing survey-as-a-service while also ensures all components work together optimally. It’s a classic full stack strategy that is unusual in the maritime defense world, where incumbents often specialize in niche solutions. Crucially, Kraken’s vertical integration creates a compounding competitive advantage. Each part of Kraken’s offering reinforces the others: its SAS sensors achieve their full potential only when mounted on a stable, capable platform (like KATFISH or a long endurance AUV powered by Kraken’s batteries). By owning and fine tuning every piece, Kraken can push the performance envelope of the whole system. A vivid example is Kraken’s KATFISH: it can map the seabed at 3 cm resolution while being towed at 10 knots, a combination of speed and image quality that dramatically improves mission efficiency and is basically unmatched by rivals. Achieving that required innovation in sonar hardware, stabilization software, and platform hydrodynamics, all under one roof. This tight integration also accelerates Kraken’s R&D cycle. Improvements in one area (like a higher energy battery or a better sonar processing algorithm) can be seamlessly integrated into the full system, yielding rapid real world performance gains. Every deployment that Kraken undertakes (including its own service contracts) feeds data and feedback into this virtuous cycle of innovation. Over time, that not only widens Kraken’s technological moat but also creates high switching costs for customers. Anduril has become a strategic partner and customer of Kraken (now we’re getting to the juicy part where Kraken is almost guaranteed to double).When Anduril decided to expand into maritime autonomy, it acquired a startup called Dive Technologies in 2022 to develop large extra large unmanned submarines. Dive (now Anduril’s maritime division) found that Kraken’s SAS sonar and SeaPower batteries were the best on the market and integrated them as core components of its design. In other words, even a well funded disruptor like Anduril recognized it was better to use Kraken’s technology than reinvent it. To me, this was a huge validation: Kraken’s products are so advanced that an industry leader chose to build its flagship underwater drones around them, effectively locking Kraken in as a critical supplier. This partnership has only deepened over time and is now a linchpin of Kraken’s future growth ,I’ll dive more into it shortly, because it forms a core pillar of the bull thesis (and a potential 5× catalyst for Kraken’s market cap). Before that, it’s worth outlining why there is such a surge of interest in undersea robotics in the first place. Kraken’s opportunity exists at the intersection of defense and offshore industry trends, both of which point to an urgent need for better tools to see and operate in the oceans. On the defense side, the world’s navies are facing evolving undersea threats, from naval mines and quiet submarines to unmanned intruders ,that cannot be effectively countered with legacy approaches. A paradigm shift is underway, moving away from manned mine sweeper ships and manned sub hunters toward autonomous unmanned systems. There are over 300 specialized mine countermeasure vessels in service globally (with the majority over 20 years old). These will need replacement, and rather than build new crewed ships with risk to sailors, many navies plan to deploy unmanned systems (towed sonars, drone submersibles, etc.) that can find and neutralize mines remotely. Autonomous underwater vehicles can keep vital sea lanes clear without putting humans in harm’s way. Kraken’s SAS was purpose built as a next generation mine hunting sonar to capitalize on this shift. Its high resolution imaging and long range allow detection of very small mines or objects on the seabed that older sonars might miss, and to do so faster, a crucial advantage when you need to scan a harbor or strait quickly for threats. Kraken has already delivered SAS sensors and whole UUV systems for several NATO navy programs, often in partnership with larger defense contractors. For example, Kraken’s equipment has been used by the U.S. Navy, Canadian Navy, Royal Danish Navy, Polish Navy, and others for seabed surveillance and mine warfare trials. In fact, Kraken’s tech has been integrated or selected in over 20 different underwater vehicle platforms worldwide, including those from major defense primes. This broad adoption underscores that Kraken is becoming something of a standard for high end undersea sensing and power. Notably, Kraken is frequently specified by name in RFPs or included by multiple bidding teams in major tenders, a strong signal of customer trust. In subsea batteries, Kraken often ends up as the sole source provider for new UUV programs, because few others offer similarly advanced pressure tolerant batteries. All of this gives Kraken a quasi monopoly in certain niches (small but critical ones). Meanwhile, the geopolitical environment is adding fuel. Great power competition has a significant undersea dimension. The US navy’s latest strategic plans (for example, the 2024 CNO Navigation Plan) put heavy emphasis on fielding unmanned and autonomous systems by 2027 to maintain readiness. That timeline, essentially, to get nextgen capabilities out in the field within a few years, implies an aggressive procurement cycle for underwater drones, sensors, and supporting tech. We are already seeing this in programs like the US navy’s Lionfish small UUV program (which selected HII’s REMUS 300 drone that uses Kraken’s sonar), and in extra large AUV efforts where Anduril’s Ghost Shark (Dive-LD) is a leading contender for both U.S. and Australian navies. The sense of urgency means that companies with ready to deploy solutions stand to win big, as opposed to slow traditional development. Kraken’s products are in a sweet spot to “ride the wave” of autonomous defense spending that’s now kicking off. On the commercial side, a different catalyst is at play: the increasing need to monitor and maintain the huge infrastructure that lies under the ocean. There are over 7000 offshore oil & gas platforms, 200000+ km of subsea pipelines, 4000+ offshore wind turbines, and 1.2 million km of telecom fiber cables under water. Inspecting and protecting this infrastructure is a monumental task, traditionally done by slow crewed vessels with towed sensors or dive teams. Kraken offers a better way here too: its suite of high resolution survey sensors (SAS, subsea lidar, subbottom profilers) can map and image infrastructure faster and in greater detail, finding things like seabed shifts, scours, or suspicious objects. Kraken has even developed a robotics-as-a-Service model for the offshore sector essentially operating its own robots on contract for clients to perform surveys and inspections. This service model generates recurring revenue and also serves as “dogfooding” for Kraken (using its own gear in the field, which helps improve the products). It’s somewhat analogous to how SpaceX operates launch services while also advancing its rocket tech. Kraken’s acquisition of companies like PanGeo (for sub bottom imaging) and 3D at Depth (for laser scanning) expanded its toolkit, making it a one stop shop for seabed data. While defense is currently like 80% of Kraken’s revenue, the commercial side (20% and growing) provides diversification and a larger TAM in the long run (think global offshore wind build out etc). In short, whether for naval defense or offshore energy, Kraken addresses a common need: to see and operate underwater with greater clarity and efficiency. The confluence of defense spending uptick and offshore infrastructure investment creates powerful tailwinds for Kraken’s order book. Perhaps the most impressive indicator of Kraken’s momentum is its sales pipeline. At the start of 2024, Kraken disclosed an order pipeline of over $900 million of potential opportunities. By early 2025, that pipeline had more than doubled to like $2 billion. This is a mix of defense and commercial opportunities globally. For context, a $2B pipeline is over 20 times Kraken’s 2024 revenue, a huge multiple that reflects how much interest there is in Kraken’s niche offerings. Now, pipeline of course is not firm orders, and not all of it will convert, but even if Kraken wins a “fair share” of it, revenues could scale dramatically. We already see conversion happening: since Q4 2024, Kraken announced roughly $60 million in new subsea battery orders (likely from a combination of customers, one being a huge roughly $31M order from a single unnamed defense client which one can assume is Anduril or a similar prime). The company’s official guidance for 2025 is revenue of $120–135M (which would be 40% growth YoY) This guidance is likely anchored by existing backlog and some probability weighted new orders. Notably, Kraken expects revenue to be back half weighted (typical for defense projects). Given the pipeline and the macro drivers, it’s plausible Kraken can sustain 40% annual growth for a few years. Management even alludes to “strong long term demand drivers” targeting 40% CAGR and 20–25% EBITDA margins. If they execute on that, Kraken would reach \~$250M revenue by 2027 organically, and that might prove conservative if certain big programs ramp up. Which brings us to the core pillar of the bull thesis: Kraken’s multi year partnership with Anduril. In my view, this relationship could be truly transformational for Kraken, potentially catapulting the company from a $595M market cap today to a multi billion dollar defense player over the next 3–5 years. Here’s the story: Anduril’s maritime division (born from the Dive Technologies acquisition) has developed a line of autonomous undersea vehicles that come in different sizes. The workhorse product is often referred to as Dive-LD (large displacement AUV), also nicknamed Ghost Shark especially in the context of the royal Australian navy program. These are large robotic submarines, roughly 18+ feet long, capable of long endurance missions (reportedly 10 days or more underwater) and depths of up to 6,000 meters. They are essentially unmanned mini submarines designed for surveillance, reconnaissance, potentially even anti submarine roles, but at a fraction of the cost of a manned sub and without risking personnel. The US navy and allied navies are extremely keen on such vehicles as force multipliers. Anduril won a contract with the US navy for its XL-AUV program last year (beating out Boeing and others), and Australia has heavily funded Ghost Shark development as well. Now here’s the kicker!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Kraken is the exclusive supplier of two critical components for these Anduril AUVs, the SAS sonar system and the battery packs. Every one of Anduril’s large AUVs is “powered by Kraken” in terms of seeing and endurance. This isn’t a one off prototype deal but more like it’s a strategic supplier relationship cemented by multi year contracts. In fact, Kraken has already delivered sonar and battery for the initial Ghost Shark prototypes (the first was unveiled April 2024 in Sydney). And as of mid 2024, Anduril is moving from prototyping to production. They have broken ground on a new 100,000+ sq ft AUV manufacturing facility in Rhode Island(RIGHT NEXT TO KRAKEN HQ BY COINCIDENCE, EMPLOYING BUYERS AND NEGOTIATORS THAT WOULD DIRECTLY BE IN CHARGE OF GETTING SHIT FROM KRAKEN!!!!) set to be operational in late 2025, with a planned capacity to build up to 200 of the large Dive-LD vehicles per year. Think about it guys, 200 per year. Even if actual orders ramp to a fraction of that, it implies a scale of UUV procurement never seen before. Each Dive-LD/Ghost Shark AUV carries an estimated $2–3 million worth of Kraken components (this includes one or more AquaPix SAS sonar arrays and a suite of SeaPower battery modules). So at full 200/yr capacity, that equates to as much as \~$500M/year in potential revenue for Kraken from this one program alone. Now, I’m not saying Anduril will hit 200/year immediately ,that’s likely a peak capacity, but even a quarter of that (50 AUVs/year) would be on the order of $125M/yr to Kraken, which exceeds Kraken’s entire 2024 revenue. And it doesn’t stop there. Anduril is also developing an even larger XL-AUV (often just called Ghost Shark as well, but essentially a bigger sibling to Dive-LD). The Australian navy intends to get at least 3 of these in the prototype phase and likely many more in production. These bigger vehicles are rumored to have nearly $10 million of Kraken content each (because they might carry multiple sonars, bigger battery banks etc). The first one has already been delivered to Australia. So if those scale up (say dozens eventually fielded), that’s another huge potential chunk. Beyond the vehicles themselves, Anduril and Kraken are also collaborating on a “Seabed Sentry” concept, essentially autonomous seabed sensors (like underwater sentinels) that would use special new form factor batteries that Kraken is now developing. Kraken’s CEO has hinted that new battery designs due in late 2025 will address small/medium UUV segments and certain stationary platforms, quite possibly a nod to custom batteries for Anduril’s expanding needs. Prototype of Anduril’s Ghost Shark Extra-Large Autonomous Submarine, unveiled in 2024. Ghost Shark (also known as Dive-LD ) is an 18 foot long unmanned AUV capable of deep dives and multi week missions. Each Ghost Shark carries Kraken’s high resolution sonar and pressure tolerant battery packs as critical onboard systems. Anduril’s new factory aims to mass produce these AUVs, potentially requiring hundreds of Kraken’s sonars and batteries in the coming years. If Anduril succeeds in scaling production of these AUVs (I’m biased cuz I love Anduril and Palmer , but I think they have a real nice shot), Kraken’s revenue could skyrocket in tandem. There are a few qualitative points to emphasize here as well: Locked In Supplier Status: Sometimes one might worry “what if Anduril switches to another supplier or builds its own sonar?” But in defense, once a technology is integrated and tested in prototypes, switching is very costly in time and risk. Navies demand reliability (“battle tested” gear) and won’t be keen on Anduril swapping out critical components last minute. Kraken’s sonar and battery were chosen after competitive evaluations, ripping them out would delay the program by years (there’s a hard 2027 readiness goal the Navy is eyeing). Moreover, HII (another big defense company via its Hydroid subsidiary) also uses Kraken’s tech in their UUVs ,so Kraken is in both of the major US pathways for unmanned subs (Anduril and HII). That means no matter if the Pentagon spreads orders between Anduril and, say, HII’s REMUS line (which it likely will to diversify suppliers, akin to how NASA split contracts between SpaceX and Boeing), Kraken wins either way because both lines rely on Kraken’s components. This is a beautiful position to be in. It creates a strong “moat” around those revenue streams. In fact, Kraken’s role in these programs is a textbook example of a supplier lock in, the company is so entrenched that it’s basically part of Anduril’s product DNA now. For Anduril to change course would not only cause delays but also make them more dependent on unproven tech, which is unlikely given the time crunch. The company announced it’s building a new battery production facility in Nova Scotia that will triple its current battery output capacity by late 2025. According to Kraken, this new plant will have multiple 6,000m pressure test bays and will increase subsea battery production capacity to almost $200 million annually once fully operational. That implies the ability to produce on the order of 3X the batteries it can today, a direct response to anticipated demand from programs like Anduril’s. Kraken’s CEO Greg Reid even stated that new battery form factors (due in 2025) will allow Kraken to address segments of the UUV market they couldn’t before, indicating they’re co developing solutions with big customers. In short, Kraken is gearing up its supply chain just in time for the Anduril opportunity. The pieces are falling into place for a potentially explosive ramp in revenue if large orders hit. To put some numbers on the Anduril impact: Let’s imagine a scenario by 2027. If Anduril and other programs ramp as anticipated, Kraken could be supplying, say, 100 Dive-LD vehicles per year (which is only 50% of Anduril’s stated capacity) and perhaps 10 of the larger Ghost Shark XL-AUVs per year, plus miscellaneous smaller vehicle battery sales. Using midpoint estimates, 100 Dive-LDs × $2.5M each = $250M, and 10 Ghost Sharks × $10M each = $100M. That’s $350M in annual revenue from Anduril related business alone. Now add Kraken’s other segments: perhaps another $100–150M from traditional naval SAS sales, KATFISH systems, services, etc. This yields a potential $450–500M revenue in a few years, which would be roughly 5× Kraken’s 2024 revenue. Even if that exact scenario doesn’t fully materialize, the direction is clear ,Kraken has a line of sight to several fold increase in revenue if the big defense customers execute on current plans. Crucially, this growth would also be high margin: product revenues like sonar and batteries come with 50% gross margins, and with scaling, Kraken’s EBITDA margins should push towards 25-30%. Let’s say, conservatively, by 2027 Kraken could be doing $400M revenue with 25% EBITDA margin. That’s $100M EBITDA. With minimal interest (the company has little debt) and a normal tax rate, net income might be around $70–80M (this assumes some economies and possibly 18-20% net margin). A company growing revenues \~30-40% and in a strategic defense niche could easily command a P/E of 20–25x. At 20× $75M net, that’s a \~$1.5 billion market cap. At 25×, nearly $1.9B. In CAD that would be around $2–2.5B, which is literally 4–5× Kraken’s current market cap!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! This aligns with my view that Kraken’s Anduril partnership has the potential to 5× the company’s value in a successful bull case. And note, this doesn’t even assume the full 200/year production or any crazy optimistic scenario, it’s using half capacity. If things really went into overdrive, the upside could be higher. Even without the full Anduril boost, Kraken has room for a double in the next couple of years!!!! as it executes on existing business. To simplify: Kraken’s SAS sonars and SeaPower batteries are, by all accounts, among the top performers globally. They offer capabilities (resolution, range, energy density) that legacy systems can’t match. This has led to Kraken being designed into numerous defense programs as either a preferred or sole source supplier. High performance products with proven field results give Kraken a degree of pricing power and protect its 50% margins. The technology is also protected by patents and deep know how (the battery tech especially has a moat due to its unique pressure tolerant chemistry). In niches like SAS, the competition is mainly a few large defense contractors who aren’t as focused on this niche. Integrated “Full Stack” Solutions: Kraken’s vertical integration (sensors + power + vehicles + data services) is a major differentiator. Think of it as a mini prime contractor: it can deliver a complete system to a navy like a mine hunting package that includes the drone, the sonar, the launch system, training, and ongoing support. It means each customer win can pull through multiple product lines (selling more per contract). Competitors who only do one piece (say just the sonar) might partner with others, but Kraken by having more pieces in house can move faster and ensure the sum is greater than parts. This cross disciplinary approach also fosters continuous innovation as mentioned earlier. Massive Market Opportunity & Pipeline: External factors are driving a secular upswing in undersea spending. Geopolitical tensions have put focus on naval strength and undersea capabilities (intelligence gathering, anti submarine warfare, mine warfare). Additionally, as mentioned, offshore renewable energy and telecom expansions drive need for seabed mapping. Kraken’s >C$2B pipeline reflects this robust demand. The company has already converted pipeline to record backlog. Many NATO programs are either in procurement or soon to be (the US alone is looking at possibly hundreds of small/medium AUVs and dozens of larger ones by 2030). Kraken, with reference wins in 30+ countries and partnerships with giants, is well positioned to capture a significant chunk of these upcoming contracts. Simply put, the pie is growing and Kraken is one of the few with a seat at the table for the high end segments. Strategic Value / M&A Angle: This is more speculative, but Kraken’s unique capabilities could make it an attractive takeover target eventually. Large defense contractors might find it easier to buy Kraken to instantly acquire its IP in SAS and battery tech, rather than develop their own. For instance, a Lockheed or Raytheon could conceivably pay a premium to fold Kraken into their portfolio and get a jump in undersea tech. Alternatively, Anduril itself, as it grows, might even consider acquiring Kraken if it ever made sense (though Anduril seems content to let Kraken operate as a supplier for now). Kraken’s tech has become almost “mission critical” for certain next gen systems, which gives it strategic importance beyond its size. I generally prefer Kraken to remain independent and grow as a “mini prime” in its own right, but investors should recognize that as Kraken scales and proves out its role, it might attract suitors. Even the speculation of this could help the stock’s valuation (we saw, for example, small defense tech firms like Aerojet command high takeover premiums due to scarcity of such assets). So there’s a potential backstop or upside kicker in a buyout scenario. Given all these positives, one must ask: Why does this opportunity exist? In other words, if Kraken is so great, why is it still a $2 stock and not widely discovered? I have a few thoughts on that, which double as the risks and counterarguments to watch: Lumpy contracts and execution risk: Kraken’s revenue can be uneven because it depends on big contracts. A single slip in the timing of a navy contract award could cause a quarterly miss or a slower year. This volatility might scare some investors who prefer steady revenues. In 2023, for instance, Kraken’s sensor product revenue dipped slightly after strong growth prior, which might have worried people, but it was largely timing of orders. The pipeline suggests the overall trend is up, but quarter to quarter, lumpiness is inherent in defense. *I*’m comfortable with this volatility, as long as the long term trajectory is intact. Kraken has mitigated some of it by diversifying (defense vs services vs commercial) and by working as a sub contractor to bigger players who often smooth out delivery schedules. Customer Concentration & Competition: With Anduril projected to become a huge part of the business, Kraken will have customer concentration risk. If something happened to Anduril’s program, Kraken would feel the pain. Additionally, success might breed competition, big players could try to build similar SAS or batteries. My autistic view: the Anduril risk is mitigated by Kraken also being in HII’s and others’ programs (so not a single point of failure). And an Anduril collapse is unlikely given their strong funding and pentagon support, if anything, they are on an upward trajectory. On competition, developing a cutting edge SAS or deep sea battery is not trivial, Kraken has a \~5-10 year head start and field experience. New entrants would face high barriers (plus navies tend to stick with proven tech, “battle-tested” is a real moat). Also, Kraken often teams up with larger primes on bids, turning potential competitors into partners. For example, Kraken’s sonar might be offered by multiple integrators in a tender, so even if Kraken isn’t prime, its product can win through multiple channels. Still, this is an area to watch, I wouldn’t want, say, a new breakthrough sonar to suddenly leapfrog Kraken. Kraken is still a micro cap stock, with limited analyst coverage and mostly retail investors so far. This lack of visibility is precisely why an inefficiency exists ,many institutional investors don’t know it or can’t buy it yet. But this is changing. The Deep Sail Capital Q2 2024 letter publicly highlighted Kraken, which brought new eyes. The recent big equity raise likely brought some institutions into the shareholder list. And I suspect if Kraken continues to deliver financial results and secures one of those marquee contracts (like a large US navy order via Anduril or similar), it will force a lot more coverage. So while illiquidity and low profile have been a drag, I view the likely trajectory as moving from “under the radar” to “on radar”. As an early investor, it makes me horny. We are so fucking early. To summarize, Kraken Robotics is a fucking hot asymmetric bet in my view. On the downside, the risks are manageable (and largely around execution timing, which the recent cash infusion helps buffer). On the upside, we have multiple ways to win: organic growth from the existing product portfolio, a likely rerating as the company graduates from micro cap bs, and the big kicker of Anduril driven scale. At today’s valuation, we’re essentially paying a modest multiple for Kraken’s current business and getting a potential Anduril explosion for free. My base case sees Kraken doubling as it achieves its 2025/2026 targets and the market rewards its growth. My bull case, factoring a successful Anduril ramp, sees Kraken’s market cap eventually in the $2–3 billion range .Could it take a few years? Certainly, defense programs don’t happen overnight. 2027 is not far off, and that’s the timeframe when many of these unmanned systems are slated for deployment.Of course, I will continue to monitor how the thesis progresses. Key things I’m watching in the next 6-12 months: any major contract announcements (like a multi year battery supply deal from Anduril or a NATO navy signing on for Kraken’s systems), the execution on 2025 guidance (hitting that 40% growth will build credibility), and developments on the US front (will Kraken’s kit be in the US navy’s upcoming programs formally, signs are pointing yes, with Lionfish and others). Also, if Kraken can achieve a NASDAQ listing, that could bring in a huge flood of new investors. But even without that, the fundamentals should drive the value. In conclusion, Kraken represents a rare convergence of cutting edge tech, accelerating financials, and powerful macro tailwinds, yet remains mispriced due to retarded market. If you have any questions, ask in comments

1. Kraken is a small cap Canadian piece of gold that has quietly become a critical supplier of advanced gear for underwater drones. In an age where autonomous systems are reshaping warfare, designing everything from the sensing “eyes” and power systems to entire robotic submersibles. It’s rare to find a microcap company that builds both the brains and the body of underwater robots, and that uniqueness is a core part of the thesis here. After deep research, Kraken has become one of my highest conviction ideas lately. In this autism dump, I’ll explain why I believe Kraken’s stock will be a multi bagger over the coming years, fueled largely by a game changing partnership with Anduril, a partnership that I believe the market profoundly undervalues. Company Overview: Kraken Robotics is a vertically integrated marine technology company that provides synthetic aperture sonar sensors, pressure tolerant subsea battery systems, and even complete unmanned underwater vehicles and services. In essence, Kraken makes three critical building blocks for modern undersea robotics: the “eyes” (sensors that image the seabed in extraordinary detail), the “energy” (battery packs that power the robots for long durations), and the platform (the vehicle or tow body that carries the sensors). By combining these, Kraken can offer full turnkey solutions to navies and offshore industries, a strategy that differentiates it from niche component suppliers. For example, Kraken’s flagship AquaPix SAS sonar can deliver seabed imaging with up to 30× higher resolution than conventional side scan sonar. This is not an incremental improvement but it’s a generational leap that can reveal objects (like mines or subsea cables) that older systems would miss. Meanwhile, Kraken’s sea power battery modules use a proprietary pressure tolerant design (encasing lithium cells in a flexible silicone matrix) that achieves roughly double the energy density of traditional pressure housed subsea batteries, while eliminating heavy pressure hulls. The result is much lighter, higher capacity power packs that allow underwater drones to operate for days at a time and dive to extreme depths. By developing vehicles and integration hardware (like its ThunderFish autonomous underwater vehicles and the KATFISH towed sonar platform) alongside those core components, Kraken controls multiple layers of the technology stack. Few companies in this space offer such a comprehensive portfolio. This means Kraken can capture more of the value chain per project, selling the sensor, the battery, the vehicle, and even providing survey-as-a-service while also ensures all components work together optimally. It’s a classic full stack strategy that is unusual in the maritime defense world, where incumbents often specialize in niche solutions. Crucially, Kraken’s vertical integration creates a compounding competitive advantage. Each part of Kraken’s offering reinforces the others: its SAS sensors achieve their full potential only when mounted on a stable, capable platform (like KATFISH or a long endurance AUV powered by Kraken’s batteries). By owning and fine tuning every piece, Kraken can push the performance envelope of the whole system. A vivid example is Kraken’s KATFISH: it can map the seabed at 3 cm resolution while being towed at 10 knots, a combination of speed and image quality that dramatically improves mission efficiency and is basically unmatched by rivals. Achieving that required innovation in sonar hardware, stabilization software, and platform hydrodynamics, all under one roof. This tight integration also accelerates Kraken’s R&D cycle. Improvements in one area (like a higher energy battery or a better sonar processing algorithm) can be seamlessly integrated into the full system, yielding rapid real world performance gains. Every deployment that Kraken undertakes (including its own service contracts) feeds data and feedback into this virtuous cycle of innovation. Over time, that not only widens Kraken’s technological moat but also creates high switching costs for customers. Anduril has become a strategic partner and customer of Kraken (now we’re getting to the juicy part where Kraken is almost guaranteed to double).When Anduril decided to expand into maritime autonomy, it acquired a startup called Dive Technologies in 2022 to develop large extra large unmanned submarines. Dive (now Anduril’s maritime division) found that Kraken’s SAS sonar and SeaPower batteries were the best on the market and integrated them as core components of its design. In other words, even a well funded disruptor like Anduril recognized it was better to use Kraken’s technology than reinvent it. To me, this was a huge validation: Kraken’s products are so advanced that an industry leader chose to build its flagship underwater drones around them, effectively locking Kraken in as a critical supplier. This partnership has only deepened over time and is now a linchpin of Kraken’s future growth ,I’ll dive more into it shortly, because it forms a core pillar of the bull thesis (and a potential 5× catalyst for Kraken’s market cap). Before that, it’s worth outlining why there is such a surge of interest in undersea robotics in the first place. Kraken’s opportunity exists at the intersection of defense and offshore industry trends, both of which point to an urgent need for better tools to see and operate in the oceans. On the defense side, the world’s navies are facing evolving undersea threats, from naval mines and quiet submarines to unmanned intruders ,that cannot be effectively countered with legacy approaches. A paradigm shift is underway, moving away from manned mine sweeper ships and manned sub hunters toward autonomous unmanned systems. There are over 300 specialized mine countermeasure vessels in service globally (with the majority over 20 years old). These will need replacement, and rather than build new crewed ships with risk to sailors, many navies plan to deploy unmanned systems (towed sonars, drone submersibles, etc.) that can find and neutralize mines remotely. Autonomous underwater vehicles can keep vital sea lanes clear without putting humans in harm’s way. Kraken’s SAS was purpose built as a next generation mine hunting sonar to capitalize on this shift. Its high resolution imaging and long range allow detection of very small mines or objects on the seabed that older sonars might miss, and to do so faster, a crucial advantage when you need to scan a harbor or strait quickly for threats. Kraken has already delivered SAS sensors and whole UUV systems for several NATO navy programs, often in partnership with larger defense contractors. For example, Kraken’s equipment has been used by the U.S. Navy, Canadian Navy, Royal Danish Navy, Polish Navy, and others for seabed surveillance and mine warfare trials. In fact, Kraken’s tech has been integrated or selected in over 20 different underwater vehicle platforms worldwide, including those from major defense primes. This broad adoption underscores that Kraken is becoming something of a standard for high end undersea sensing and power. Notably, Kraken is frequently specified by name in RFPs or included by multiple bidding teams in major tenders, a strong signal of customer trust. In subsea batteries, Kraken often ends up as the sole source provider for new UUV programs, because few others offer similarly advanced pressure tolerant batteries. All of this gives Kraken a quasi monopoly in certain niches (small but critical ones). Meanwhile, the geopolitical environment is adding fuel. Great power competition has a significant undersea dimension. The US navy’s latest strategic plans (for example, the 2024 CNO Navigation Plan) put heavy emphasis on fielding unmanned and autonomous systems by 2027 to maintain readiness. That timeline, essentially, to get nextgen capabilities out in the field within a few years, implies an aggressive procurement cycle for underwater drones, sensors, and supporting tech. We are already seeing this in programs like the US navy’s Lionfish small UUV program (which selected HII’s REMUS 300 drone that uses Kraken’s sonar), and in extra large AUV efforts where Anduril’s Ghost Shark (Dive-LD) is a leading contender for both U.S. and Australian navies. The sense of urgency means that companies with ready to deploy solutions stand to win big, as opposed to slow traditional development. Kraken’s products are in a sweet spot to “ride the wave” of autonomous defense spending that’s now kicking off. On the commercial side, a different catalyst is at play: the increasing need to monitor and maintain the huge infrastructure that lies under the ocean. There are over 7000 offshore oil & gas platforms, 200000+ km of subsea pipelines, 4000+ offshore wind turbines, and 1.2 million km of telecom fiber cables under water. Inspecting and protecting this infrastructure is a monumental task, traditionally done by slow crewed vessels with towed sensors or dive teams. Kraken offers a better way here too: its suite of high resolution survey sensors (SAS, subsea lidar, subbottom profilers) can map and image infrastructure faster and in greater detail, finding things like seabed shifts, scours, or suspicious objects. Kraken has even developed a robotics-as-a-Service model for the offshore sector essentially operating its own robots on contract for clients to perform surveys and inspections. This service model generates recurring revenue and also serves as “dogfooding” for Kraken (using its own gear in the field, which helps improve the products). It’s somewhat analogous to how SpaceX operates launch services while also advancing its rocket tech. Kraken’s acquisition of companies like PanGeo (for sub bottom imaging) and 3D at Depth (for laser scanning) expanded its toolkit, making it a one stop shop for seabed data. While defense is currently like 80% of Kraken’s revenue, the commercial side (20% and growing) provides diversification and a larger TAM in the long run (think global offshore wind build out etc). In short, whether for naval defense or offshore energy, Kraken addresses a common need: to see and operate underwater with greater clarity and efficiency. The confluence of defense spending uptick and offshore infrastructure investment creates powerful tailwinds for Kraken’s order book. Perhaps the most impressive indicator of Kraken’s momentum is its sales pipeline. At the start of 2024, Kraken disclosed an order pipeline of over $900 million of potential opportunities. By early 2025, that pipeline had more than doubled to like $2 billion. This is a mix of defense and commercial opportunities globally. For context, a $2B pipeline is over 20 times Kraken’s 2024 revenue, a huge multiple that reflects how much interest there is in Kraken’s niche offerings. Now, pipeline of course is not firm orders, and not all of it will convert, but even if Kraken wins a “fair share” of it, revenues could scale dramatically. We already see conversion happening: since Q4 2024, Kraken announced roughly $60 million in new subsea battery orders (likely from a combination of customers, one being a huge roughly $31M order from a single unnamed defense client which one can assume is Anduril or a similar prime). The company’s official guidance for 2025 is revenue of $120–135M (which would be 40% growth YoY) This guidance is likely anchored by existing backlog and some probability weighted new orders. Notably, Kraken expects revenue to be back half weighted (typical for defense projects). Given the pipeline and the macro drivers, it’s plausible Kraken can sustain 40% annual growth for a few years. Management even alludes to “strong long term demand drivers” targeting 40% CAGR and 20–25% EBITDA margins. If they execute on that, Kraken would reach \~$250M revenue by 2027 organically, and that might prove conservative if certain big programs ramp up. Which brings us to the core pillar of the bull thesis: Kraken’s multi year partnership with Anduril. In my view, this relationship could be truly transformational for Kraken, potentially catapulting the company from a $595M market cap today to a multi billion dollar defense player over the next 3–5 years. Here’s the story: Anduril’s maritime division (born from the Dive Technologies acquisition) has developed a line of autonomous undersea vehicles that come in different sizes. The workhorse product is often referred to as Dive-LD (large displacement AUV), also nicknamed Ghost Shark especially in the context of the royal Australian navy program. These are large robotic submarines, roughly 18+ feet long, capable of long endurance missions (reportedly 10 days or more underwater) and depths of up to 6,000 meters. They are essentially unmanned mini submarines designed for surveillance, reconnaissance, potentially even anti submarine roles, but at a fraction of the cost of a manned sub and without risking personnel. The US navy and allied navies are extremely keen on such vehicles as force multipliers. Anduril won a contract with the US navy for its XL-AUV program last year (beating out Boeing and others), and Australia has heavily funded Ghost Shark development as well. Now here’s the kicker!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Kraken is the exclusive supplier of two critical components for these Anduril AUVs, the SAS sonar system and the battery packs. Every one of Anduril’s large AUVs is “powered by Kraken” in terms of seeing and endurance. This isn’t a one off prototype deal but more like it’s a strategic supplier relationship cemented by multi year contracts. In fact, Kraken has already delivered sonar and battery for the initial Ghost Shark prototypes (the first was unveiled April 2024 in Sydney). And as of mid 2024, Anduril is moving from prototyping to production. They have broken ground on a new 100,000+ sq ft AUV manufacturing facility in Rhode Island(RIGHT NEXT TO KRAKEN HQ BY COINCIDENCE, EMPLOYING BUYERS AND NEGOTIATORS THAT WOULD DIRECTLY BE IN CHARGE OF GETTING SHIT FROM KRAKEN!!!!) set to be operational in late 2025, with a planned capacity to build up to 200 of the large Dive-LD vehicles per year. Think about it guys, 200 per year. Even if actual orders ramp to a fraction of that, it implies a scale of UUV procurement never seen before. Each Dive-LD/Ghost Shark AUV carries an estimated $2–3 million worth of Kraken components (this includes one or more AquaPix SAS sonar arrays and a suite of SeaPower battery modules). So at full 200/yr capacity, that equates to as much as \~$500M/year in potential revenue for Kraken from this one program alone. Now, I’m not saying Anduril will hit 200/year immediately ,that’s likely a peak capacity, but even a quarter of that (50 AUVs/year) would be on the order of $125M/yr to Kraken, which exceeds Kraken’s entire 2024 revenue. And it doesn’t stop there. Anduril is also developing an even larger XL-AUV (often just called Ghost Shark as well, but essentially a bigger sibling to Dive-LD). The Australian navy intends to get at least 3 of these in the prototype phase and likely many more in production. These bigger vehicles are rumored to have nearly $10 million of Kraken content each (because they might carry multiple sonars, bigger battery banks etc). The first one has already been delivered to Australia. So if those scale up (say dozens eventually fielded), that’s another huge potential chunk. Beyond the vehicles themselves, Anduril and Kraken are also collaborating on a “Seabed Sentry” concept, essentially autonomous seabed sensors (like underwater sentinels) that would use special new form factor batteries that Kraken is now developing. Kraken’s CEO has hinted that new battery designs due in late 2025 will address small/medium UUV segments and certain stationary platforms, quite possibly a nod to custom batteries for Anduril’s expanding needs. Prototype of Anduril’s Ghost Shark Extra-Large Autonomous Submarine, unveiled in 2024. Ghost Shark (also known as Dive-LD ) is an 18 foot long unmanned AUV capable of deep dives and multi week missions. Each Ghost Shark carries Kraken’s high resolution sonar and pressure tolerant battery packs as critical onboard systems. Anduril’s new factory aims to mass produce these AUVs, potentially requiring hundreds of Kraken’s sonars and batteries in the coming years. If Anduril succeeds in scaling production of these AUVs (I’m biased cuz I love Anduril and Palmer , but I think they have a real nice shot), Kraken’s revenue could skyrocket in tandem. There are a few qualitative points to emphasize here as well: Locked In Supplier Status: Sometimes one might worry “what if Anduril switches to another supplier or builds its own sonar?” But in defense, once a technology is integrated and tested in prototypes, switching is very costly in time and risk. Navies demand reliability (“battle tested” gear) and won’t be keen on Anduril swapping out critical components last minute. Kraken’s sonar and battery were chosen after competitive evaluations, ripping them out would delay the program by years (there’s a hard 2027 readiness goal the Navy is eyeing). Moreover, HII (another big defense company via its Hydroid subsidiary) also uses Kraken’s tech in their UUVs ,so Kraken is in both of the major US pathways for unmanned subs (Anduril and HII). That means no matter if the Pentagon spreads orders between Anduril and, say, HII’s REMUS line (which it likely will to diversify suppliers, akin to how NASA split contracts between SpaceX and Boeing), Kraken wins either way because both lines rely on Kraken’s components. This is a beautiful position to be in. It creates a strong “moat” around those revenue streams. In fact, Kraken’s role in these programs is a textbook example of a supplier lock in, the company is so entrenched that it’s basically part of Anduril’s product DNA now. For Anduril to change course would not only cause delays but also make them more dependent on unproven tech, which is unlikely given the time crunch. The company announced it’s building a new battery production facility in Nova Scotia that will triple its current battery output capacity by late 2025. According to Kraken, this new plant will have multiple 6,000m pressure test bays and will increase subsea battery production capacity to almost $200 million annually once fully operational. That implies the ability to produce on the order of 3X the batteries it can today, a direct response to anticipated demand from programs like Anduril’s. Kraken’s CEO Greg Reid even stated that new battery form factors (due in 2025) will allow Kraken to address segments of the UUV market they couldn’t before, indicating they’re co developing solutions with big customers. In short, Kraken is gearing up its supply chain just in time for the Anduril opportunity. The pieces are falling into place for a potentially explosive ramp in revenue if large orders hit. To put some numbers on the Anduril impact: Let’s imagine a scenario by 2027. If Anduril and other programs ramp as anticipated, Kraken could be supplying, say, 100 Dive-LD vehicles per year (which is only 50% of Anduril’s stated capacity) and perhaps 10 of the larger Ghost Shark XL-AUVs per year, plus miscellaneous smaller vehicle battery sales. Using midpoint estimates, 100 Dive-LDs × $2.5M each = $250M, and 10 Ghost Sharks × $10M each = $100M. That’s $350M in annual revenue from Anduril related business alone. Now add Kraken’s other segments: perhaps another $100–150M from traditional naval SAS sales, KATFISH systems, services, etc. This yields a potential $450–500M revenue in a few years, which would be roughly 5× Kraken’s 2024 revenue. Even if that exact scenario doesn’t fully materialize, the direction is clear ,Kraken has a line of sight to several fold increase in revenue if the big defense customers execute on current plans. Crucially, this growth would also be high margin: product revenues like sonar and batteries come with 50% gross margins, and with scaling, Kraken’s EBITDA margins should push towards 25-30%. Let’s say, conservatively, by 2027 Kraken could be doing $400M revenue with 25% EBITDA margin. That’s $100M EBITDA. With minimal interest (the company has little debt) and a normal tax rate, net income might be around $70–80M (this assumes some economies and possibly 18-20% net margin). A company growing revenues \~30-40% and in a strategic defense niche could easily command a P/E of 20–25x. At 20× $75M net, that’s a \~$1.5 billion market cap. At 25×, nearly $1.9B. In CAD that would be around $2–2.5B, which is literally 4–5× Kraken’s current market cap!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! This aligns with my view that Kraken’s Anduril partnership has the potential to 5× the company’s value in a successful bull case. And note, this doesn’t even assume the full 200/year production or any crazy optimistic scenario, it’s using half capacity. If things really went into overdrive, the upside could be higher. Even without the full Anduril boost, Kraken has room for a double in the next couple of years!!!! as it executes on existing business. To simplify: Kraken’s SAS sonars and SeaPower batteries are, by all accounts, among the top performers globally. They offer capabilities (resolution, range, energy density) that legacy systems can’t match. This has led to Kraken being designed into numerous defense programs as either a preferred or sole source supplier. High performance products with proven field results give Kraken a degree of pricing power and protect its 50% margins. The technology is also protected by patents and deep know how (the battery tech especially has a moat due to its unique pressure tolerant chemistry). In niches like SAS, the competition is mainly a few large defense contractors who aren’t as focused on this niche. Integrated “Full Stack” Solutions: Kraken’s vertical integration (sensors + power + vehicles + data services) is a major differentiator. Think of it as a mini prime contractor: it can deliver a complete system to a navy like a mine hunting package that includes the drone, the sonar, the launch system, training, and ongoing support. It means each customer win can pull through multiple product lines (selling more per contract). Competitors who only do one piece (say just the sonar) might partner with others, but Kraken by having more pieces in house can move faster and ensure the sum is greater than parts. This cross disciplinary approach also fosters continuous innovation as mentioned earlier. Massive Market Opportunity & Pipeline: External factors are driving a secular upswing in undersea spending. Geopolitical tensions have put focus on naval strength and undersea capabilities (intelligence gathering, anti submarine warfare, mine warfare). Additionally, as mentioned, offshore renewable energy and telecom expansions drive need for seabed mapping. Kraken’s >C$2B pipeline reflects this robust demand. The company has already converted pipeline to record backlog. Many NATO programs are either in procurement or soon to be (the US alone is looking at possibly hundreds of small/medium AUVs and dozens of larger ones by 2030). Kraken, with reference wins in 30+ countries and partnerships with giants, is well positioned to capture a significant chunk of these upcoming contracts. Simply put, the pie is growing and Kraken is one of the few with a seat at the table for the high end segments. Strategic Value / M&A Angle: This is more speculative, but Kraken’s unique capabilities could make it an attractive takeover target eventually. Large defense contractors might find it easier to buy Kraken to instantly acquire its IP in SAS and battery tech, rather than develop their own. For instance, a Lockheed or Raytheon could conceivably pay a premium to fold Kraken into their portfolio and get a jump in undersea tech. Alternatively, Anduril itself, as it grows, might even consider acquiring Kraken if it ever made sense (though Anduril seems content to let Kraken operate as a supplier for now). Kraken’s tech has become almost “mission critical” for certain next gen systems, which gives it strategic importance beyond its size. I generally prefer Kraken to remain independent and grow as a “mini prime” in its own right, but investors should recognize that as Kraken scales and proves out its role, it might attract suitors. Even the speculation of this could help the stock’s valuation (we saw, for example, small defense tech firms like Aerojet command high takeover premiums due to scarcity of such assets). So there’s a potential backstop or upside kicker in a buyout scenario. Given all these positives, one must ask: Why does this opportunity exist? In other words, if Kraken is so great, why is it still a $2 stock and not widely discovered? I have a few thoughts on that, which double as the risks and counterarguments to watch: Lumpy contracts and execution risk: Kraken’s revenue can be uneven because it depends on big contracts. A single slip in the timing of a navy contract award could cause a quarterly miss or a slower year. This volatility might scare some investors who prefer steady revenues. In 2023, for instance, Kraken’s sensor product revenue dipped slightly after strong growth prior, which might have worried people, but it was largely timing of orders. The pipeline suggests the overall trend is up, but quarter to quarter, lumpiness is inherent in defense. *I*’m comfortable with this volatility, as long as the long term trajectory is intact. Kraken has mitigated some of it by diversifying (defense vs services vs commercial) and by working as a sub contractor to bigger players who often smooth out delivery schedules. Customer Concentration & Competition: With Anduril projected to become a huge part of the business, Kraken will have customer concentration risk. If something happened to Anduril’s program, Kraken would feel the pain. Additionally, success might breed competition, big players could try to build similar SAS or batteries. My autistic view: the Anduril risk is mitigated by Kraken also being in HII’s and others’ programs (so not a single point of failure). And an Anduril collapse is unlikely given their strong funding and pentagon support, if anything, they are on an upward trajectory. On competition, developing a cutting edge SAS or deep sea battery is not trivial, Kraken has a \~5-10 year head start and field experience. New entrants would face high barriers (plus navies tend to stick with proven tech, “battle-tested” is a real moat). Also, Kraken often teams up with larger primes on bids, turning potential competitors into partners. For example, Kraken’s sonar might be offered by multiple integrators in a tender, so even if Kraken isn’t prime, its product can win through multiple channels. Still, this is an area to watch, I wouldn’t want, say, a new breakthrough sonar to suddenly leapfrog Kraken. Kraken is still a micro cap stock, with limited analyst coverage and mostly retail investors so far. This lack of visibility is precisely why an inefficiency exists ,many institutional investors don’t know it or can’t buy it yet. But this is changing. The Deep Sail Capital Q2 2024 letter publicly highlighted Kraken, which brought new eyes. The recent big equity raise likely brought some institutions into the shareholder list. And I suspect if Kraken continues to deliver financial results and secures one of those marquee contracts (like a large US navy order via Anduril or similar), it will force a lot more coverage. So while illiquidity and low profile have been a drag, I view the likely trajectory as moving from “under the radar” to “on radar”. As an early investor, it makes me horny. We are so fucking early. To summarize, Kraken Robotics is a fucking hot asymmetric bet in my view. On the downside, the risks are manageable (and largely around execution timing, which the recent cash infusion helps buffer). On the upside, we have multiple ways to win: organic growth from the existing product portfolio, a likely rerating as the company graduates from micro cap bs, and the big kicker of Anduril driven scale. At today’s valuation, we’re essentially paying a modest multiple for Kraken’s current business and getting a potential Anduril explosion for free. My base case sees Kraken doubling as it achieves its 2025/2026 targets and the market rewards its growth. My bull case, factoring a successful Anduril ramp, sees Kraken’s market cap eventually in the $2–3 billion range .Could it take a few years? Certainly, defense programs don’t happen overnight. 2027 is not far off, and that’s the timeframe when many of these unmanned systems are slated for deployment.Of course, I will continue to monitor how the thesis progresses. Key things I’m watching in the next 6-12 months: any major contract announcements (like a multi year battery supply deal from Anduril or a NATO navy signing on for Kraken’s systems), the execution on 2025 guidance (hitting that 40% growth will build credibility), and developments on the US front (will Kraken’s kit be in the US navy’s upcoming programs formally, signs are pointing yes, with Lionfish and others). Also, if Kraken can achieve a NASDAQ listing, that could bring in a huge flood of new investors. But even without that, the fundamentals should drive the value. In conclusion, Kraken represents a rare convergence of cutting edge tech, accelerating financials, and powerful macro tailwinds, yet remains mispriced due to retarded market. If you have any questions, ask in comments