Swarmer, Inc. (NASDAQ:SWMR) made our Mad Money recap, as Jim Cramer shared his take on the stock and highlighted resilient consumer spending despite the Iran conflict. Cramer said that he cannot endorse the stock, as he stated:

I cannot in good conscience endorse Swarmer up here… Now, normally, I’d tell you something like this is more of a business plan than an actual business, but clearly, something about Swarmer resonated with the market. So I dug deeper, and the truth is this company’s got a great story even if it’s still in its infancy… Even down here with the stock down nearly 60% from its highs… last Wednesday, I can’t tell you to buy Swarmer in anything more than an extremely speculative position because the numbers just aren’t there yet. Again, Swarmer has barely had any revenue to date, and it’s losing millions of dollars a year.

Now, in its IPO prospectus… the company does cite signed contracts for new and existing customers amounting to roughly $33 million over the next 12 to 24 months, with about 60% of the revenue expected to be recognized this year. But even if we run the numbers on that and make a wildly optimistic assumption that Swarmer has almost 20 million in revenues this year, then the company’s still valued at more than 16 times sales, not earnings, sales, which is very, very expensive. Plus, it’s worth noting that there are a ton of shares set aside for employee stock plans and other things that are not being included in the company’s official share count, but could result in significant dilution for shareholders, and that’s in the not-too-distant future.

And of course, given how well the stock’s done to start, the company would be crazy not to issue more shares itself as soon as it’ll be able to. Finally, I just don’t love how Swarmer seemed to come out of nowhere. There’s no real institutional support for this one, given that it used just one boutique capital markets firm as its underwriter. I don’t know, doesn’t seem right. If the stock stays elevated, it might pick up some coverage from larger firms, but we can’t assume that.

So here’s the bottom line: Swarmer hit the market with a bang last week. But after looking closely at the company, I think this one needs more time in the oven, maybe much more. It’s still very, very early, even if it’s got a terrific elevator pitch. My verdict? Why don’t we do this? Let’s keep an eye on Swarmer for now and see if those signed contracts result in some more meaningful revenue this year. And let’s see how the stock trades when there’s not the pinch of a very low float like right now, because I expect there to be lots of dilution coming in the next year or two. For now, though, Swarmer, let’s call it a cool story, but not much more than that.

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Swarmer, Inc (NASDAQ:SWMR) is a defense technology firm that develops vendor-agnostic software for autonomous swarm coordination and multi-domain unmanned systems.

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