Merlin Stock Soars On Defense Milestone, But IPO Wreckage Is Hard To Ignore

Merlin, Inc. (NASDAQ:MRLN) shares surged Friday morning after the autonomous aviation startup announced it successfully completed a critical design review for its Merlin Pilot system with U.S. Special Operations Command (USSOCOM).

It is a meaningful technical and contractual milestone for a company that has struggled to live up to its post-IPO promise.

• MRLN stock is climbing. See the chart and price action here. 

Shares were trading around $8.94, per Benzinga Pro data, still deeply below the 52-week high of $17 hit shortly after the company went public on March 17, 2026. 

Merlin stock has shed roughly 47% from that peak, a painful slide for early investors who bought into the thesis that Merlin could become the “operating system of record” for autonomous military aviation.

The USSOCOM milestone is the clearest validation Merlin has delivered yet. 

The company’s aircraft-agnostic Merlin Pilot platform — designed to enable autonomous flight across a wide range of aircraft and mission profiles — cleared a critical engineering checkpoint with one of the most demanding customers in the world. 

The C-130J and KC-135 programs remain the centerpiece of Merlin’s defense revenue strategy, and Friday’s development suggests the programs are advancing on schedule.

Why It Matters

The timing matters. Merlin’s first quarterly earnings report as a public company in mid-May was a rough read. 

Quarterly revenue came in at just $1 million, badly missing the $3 million consensus estimate, and EPS landed at a loss of 37 cents, far worse than the 10 cent loss Wall Street had penciled in. 

The post-earnings sell-off was swift, and Roth Capital — one of only two firms covering the name — slashed its price target from $25 to $15 before restoring it to $25 in April.

The analyst’s optimism hasn’t disappeared. Both Roth Capital and TD Cowen maintain Buy ratings, with Roth’s $25 target implying more than 175% upside from current levels. 

TD Cowen, which initiated coverage this week, flagged projected losses of $129 million in 2026 but argued the defense contract ramp justifies patience, according to CNBC. 

The Takeaway

Merlin is a compelling defense AI story wrapped around a company generating less than $2 million in quarterly revenue with a market cap near $182.6 million. 

Friday’s design review win is exactly the kind of milestone that can re-rate a pre-revenue defense tech name — but bulls will need to see it translate into contract awards and, eventually, revenue that can justify the valuation. 

MRLN Stock Price Activity: Merlin stock was up 25.21% at $8.99 at the time of publication on Friday, according to Benzinga Pro.