Personal Finance

Why Axon Enterprise Inc. Shares Plunged Today

Officer with body camera.

What happened

Shares of Taser and body-camera maker Axon Enterprise Inc. (NASDAQ: AAXN) plunged as much as 17.1% in trading Wednesday after the company reported second-quarter 2018 results. Shares recovered some of their losses late in the day, but were still down 12% as of 1:45 p.m. EDT.

So what

Quarterly revenue jumped 24.6% to $99.2 million, and net income nearly quadrupled to $8.5 million, or $0.15 per share. On a non- GAAP basis, which pulls out one-time items, earnings were $0.18 per share, or double what analysts had estimated.

Officer with body camera.

Image source: Axon Enterprise.

What may have spooked investors a bit is growth guidance for the rest of the year. After growing 27.7% and 24.6% in the first two quarters respectively, management gave guidance of 18% to 20% in revenue growth for the full year.

The other news was Axon's announcement of a partnership with Verizon to "bring connectivity to public-safety solutions for the benefit of first responders and the communities they serve." AT&T will also be a partner, although in a more secondary role. This could be a precursor to taking body camera images off devices wirelessly.

Now what

Axon's shares are up 116.5% on the year , even after today's drop, so investor expectations were sky high. Given the growth of revenue, it would have been nice to see an increase in revenue guidance. But management isn't setting the bar too high for itself in the second half of the year.

The more important thing is that Axon is firing on all cylinders, and new products are being tested that could grow the business for years to come. For example, Axon Records, which could change how incidents are documented by law enforcement, is in development. It will be out next year and should be a big growth product. I see no reason to panic after today's drop; this looks like a long-term buying opportunity.

10 stocks we like better than Axon Enterprise

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Axon Enterprise wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Travis Hoium owns shares of Axon Enterprise. The Motley Fool owns shares of and recommends Axon Enterprise. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AAXN

Other Topics

Stocks

Latest Personal Finance Videos

    #TradeTalks: A Holistic Financial Picture to Give a True Indicator of your Financial Health

    Harvest Founder Nami Baral joins Jill Malandrino on Nasdaq #TradeTalks to discuss the Harvest PRO Index, holistic financial picture to give a true indicator of your financial health, not just a credit score.

    Oct 9, 2020

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More