# Kraken Robotics (PNG): Trading at Half Its C$8.50 Offer Price After the Covelya Deal > Kraken Robotics closed at C$4.34 on October 21, 2026, about half the C$8.50 price institutions paid to fund the Covelya deal. Deep Sail Capital says the fund selling is mostly done. We check the guidance, the C$125 million term loan, the arbitration and what Q3 must show. By MCAFax · Published October 22, 2026 Section: Markets & Main Street › From Wall Street · Series: Market Calls, Investigated (https://mcafax.com/notebook/series/market-calls-investigated) Canonical: https://mcafax.com/notebook/png-kraken-robotics-half-its-c-8-50-offer-price-after-covelya-deal Source: MCAFax, The Broker's Notebook (https://mcafax.com/notebook). MCAFax is not a lender or a law firm. --- Kraken Robotics Inc. (TSX Venture: PNG; OTCQB: KRKNF) closed at C$4.34 on October 21, 2026, about half the C$8.50 price institutions paid in March to help fund the Covelya Group acquisition. Sean Westropp of Deep Sail Capital named Kraken Robotics his favorite long near a 52-week low on October 22, arguing that the funds that crowded in have mostly cleared out. The next test is the Q3 2026 report, the first quarter to include Covelya. *This is journalism and commentary, not investment advice. We hold no position unless stated.* ## Key facts - **Ticker and exchange:** Kraken Robotics Inc., PNG on the TSX Venture Exchange (KRKNF on OTCQB); prices in Canadian dollars. - **Situation type:** a small-cap defense and subsea technology name down about 58% from its peak after a large, financed acquisition. - **The call:** Deep Sail Capital (@DeepSailCapital) is long; on September 28, 2026 it said the stock was "very close to a bottom" and that it had added. - **Price:** C$4.34 at the October 21, 2026 close, versus a closing high of C$10.23 on March 10, 2026 and a low close of C$3.98 on October 15 (Yahoo Finance). - **Size:** about 370.9 million basic shares after the deal (company, July 2026), or roughly C$1.61 billion at C$4.34, by our math. - **Guidance:** 2026 revenue of C$290 million to C$320 million and adjusted EBITDA of C$65 million to C$75 million, including about half a year of Covelya. - **Main risk:** integration and execution on a deal that cost about C$615 million, about six times Kraken Robotics' 2025 revenue of C$102.2 million. ## Is Kraken Robotics a good bet right now? The bull case is that the selling was about positioning, not the business. Kraken Robotics kept its 2026 guidance after Q2, and announced 2026 orders reached C$355 million on a combined basis. The bear case is that the stock has already broken once. Kraken Robotics posted Q2 results that were mixed against analyst estimates, booked a C$1.5 million revenue reversal and recorded a provision tied to a supplier arbitration. The real proof, a full quarter of Covelya, has not been reported yet. ## Why are investors bullish on Kraken Robotics? - **A cheaper entry than the deal financing.** Kraken Robotics sold 47,353,550 subscription receipts at C$8.50 on March 12, 2026 and issued Covelya's seller 15,882,352 shares at the same deemed price. The stock now trades 49% below that level. - **An earnings target.** Westropp's September post said Kraken Robotics would earn C$0.20 a share in 2028, with revenue growing in the mid-20s to 30s percent. At C$4.34, that is about 21.7 times his 2028 estimate. - **Defense demand.** Kraken Robotics sells sonar, subsea batteries and services. Its Q2 release added a long-term supply agreement for batteries with an unnamed maker of extra-large unmanned underwater vehicles. - **Synergies.** The company expects about C$10 million of cost savings within 24 months and low-to-mid double-digit EPS accretion in 2027. ## Who's making this call and why? Sean Westropp runs Deep Sail Capital, a long/short growth and microcap fund, and posts as @DeepSailCapital. On September 28, 2026 he [wrote](https://x.com/DeepSailCapital/status/2104614718518563049) that Kraken Robotics was "very close to a bottom" after a 60% drawdown, cited product ramps with Anduril, and said he had added more. On October 22 he listed the stock first among his [favorite longs near a 52-week low](https://x.com/DeepSailCapital/status/2113089959091679332). In a [reply](https://x.com/DeepSailCapital/status/2113092515821944935), he called the slide "a long clearing event over the last 4 months" and said funds that loaded up near C$2 two years ago were "mostly past us." **Track record.** In our tracking, Deep Sail Capital is 13-12 (a .520 win rate) on 25 calls scored at 180 days against the S&P 500, with an average edge of +8.9 percentage points, ranked 6th on the career table. Its longs are 4-8 and its last 10 scored calls went 2-8. Its worst scored call is this same stock: a March 3, 2026 Kraken Robotics long trailed the S&P 500 by 57.4 points. See the [scoreboard](https://mcafax.com/notebook/market-calls-scoreboard). **Other supporters:** - Dutch investor Ehrmantraut Capital [wrote](https://x.com/EhrmantrautCap_/status/2107147970902642860) on October 5, with the stock at C$4.33: "I'm still bullish on it." - Independent small-cap researcher Anton (@Im_Specter) [argued](https://x.com/Im_Specter/status/2097625668280259029) on September 9 that the Covelya merger opens a large maritime defense and energy market and that "The recent decline may be an opportunity." ## Who disagrees? Chart-focused trader PlotLine (@TradeTactician1) [said](https://x.com/TradeTactician1/status/2103851328770539962) on September 26 that Kraken Robotics was in "stage 4" of a market cycle and that buyers should wait for the price to flatten near the 200-week average, around $2. The stock has since traded near C$4. Other risks from the filings: - **Execution.** Q2 revenue rose only 4% to C$27.3 million, and 2026 revenue is weighted to the second half. - **Leverage.** Kraken Robotics drew a new C$125 million term loan to close Covelya. - **Legal.** The Q2 net loss of C$7.5 million included a provision for an arbitration over a 2017 supplier contract, per MarketWatch. - **Overhang.** Holders who paid C$8.50 in March sit on large paper losses. ## What are the key facts to verify? - The [Q2 2026 results release](https://www.krakenrobotics.com/news-releases/kraken-robotics-reports-q2-2026-financial-results/) for revenue, the reversal, orders and guidance. - The [Covelya closing release](https://www.krakenrobotics.com/news-releases/kraken-robotics-announces-closing-of-strategic-acquisition-of-covelya-group-limited-updated-2026-guidance-and-appointments-to-executive-team/) for the price, the share issue and the C$125 million term loan. - The [March 12 offering release](https://www.krakenrobotics.com/news-releases/kraken-robotics-announces-closing-of-402-5-million-public-offering-of-subscription-receipts/) for the C$8.50 receipts. - [MarketWatch](https://www.marketwatch.com/story/kraken-robotics-loss-widens-despite-revenue-rise-on-higher-deliveries-61b6e1aa) on the Q2 loss and arbitration provision. ## What would prove it right or wrong? **Right:** Q3 2026 shows strong combined revenue and margins, Kraken Robotics confirms the C$290 million to C$320 million guidance, and new defense orders arrive. **Wrong:** guidance is cut, Covelya margins disappoint, the arbitration grows, or the stock keeps sliding toward the low levels chart traders are watching. *This is journalism and commentary, not investment advice. We hold no position unless stated.* ## Questions readers ask **What does Kraken Robotics (PNG) do?** Kraken Robotics Inc. (TSX Venture: PNG; OTCQB: KRKNF) makes sonar systems and subsea batteries and provides subsea services for navies and offshore energy customers. In July 2026 Kraken Robotics closed its roughly C$615 million acquisition of Covelya Group. **Why has Kraken Robotics stock fallen?** Kraken Robotics closed at C$4.34 on October 21, 2026, down about 58% from its C$10.23 closing high on March 10, 2026. The slide followed the large Covelya deal, mixed Q2 results, a C$1.5 million revenue reversal and an arbitration provision; Deep Sail Capital argues much of it was funds clearing out. **What is the call on Kraken Robotics?** Deep Sail Capital is long Kraken Robotics. On September 28, 2026 it said the stock was "very close to a bottom" and that it added shares, and on October 22, 2026 it named Kraken Robotics its favorite long near a 52-week low. **Who is Deep Sail Capital and what is its track record?** Deep Sail Capital is a long/short growth and microcap fund run by Sean Westropp. In our tracking it is 13-12 on 25 calls scored at 180 days against the S&P 500, with an average edge of +8.9 points, though its March 3, 2026 Kraken Robotics long trailed the index by 57.4 points. **How does Kraken Robotics' share price compare with the March 2026 offering?** Kraken Robotics sold 47,353,550 subscription receipts at C$8.50 on March 12, 2026 to help fund Covelya. At the C$4.34 close on October 21, 2026, the stock was 49% below that price. **What is Kraken Robotics' 2026 guidance?** Kraken Robotics guides to 2026 revenue of C$290 million to C$320 million and adjusted EBITDA of C$65 million to C$75 million, including about half a year of Covelya. The company kept that guidance when it reported Q2 2026 on August 27, 2026. **How much is Kraken Robotics worth?** Kraken Robotics had about 370.9 million basic shares after the Covelya deal, according to its July 2026 presentation. At C$4.34, that is a market value of roughly C$1.61 billion, by our math. **What is the bear case on Kraken Robotics?** Critics point to execution risk on a deal about six times Kraken Robotics' 2025 revenue, a new C$125 million term loan, a supplier arbitration provision and holders sitting on losses from C$8.50. One chart trader said buyers should wait for a level near the 200-week average, around $2. **What is the next catalyst for Kraken Robotics?** The next catalyst is Kraken Robotics' Q3 2026 report, the first quarter to include Covelya. Investors will look for combined revenue, margins and confirmation of the 2026 guidance. **What would prove the Kraken Robotics bull case wrong?** A guidance cut, weak Covelya margins, a larger arbitration cost or a further slide in the stock would undercut the bull case on Kraken Robotics. Strong Q3 numbers and new defense orders would support it.