What Happened?

Shares of self defense company AXON (NASDAQ: AXON) fell 18.5% in the morning session after the company reported third-quarter results that missed profit expectations and provided weak EBITDA guidance for the upcoming quarter. While revenue for the quarter grew 30.6% year-on-year to $710.6 million, beating Wall Street's estimates, investors focused on the negatives. The company's adjusted earnings per share of $1.17 came in 24.1% below the consensus estimate of $1.54. Furthermore, Axon's EBITDA guidance for the fourth quarter was below analyst expectations. The company also saw its operating margin contract, falling to -0.3% from 4.4% in the same quarter last year, indicating rising expenses were outpacing revenue growth. Despite the earnings miss, the company's revenue guidance for the next quarter was slightly ahead of forecasts.

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What Is The Market Telling Us

Axon’s shares are very volatile and have had 23 moves greater than 5% over the last year. But moves this big are rare even for Axon and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 19 days ago when the stock gained 3.2% on the news that TD Cowen reiterated its Buy rating and $925.00 price target on the company's stock, citing expectations for strong quarterly results and an accelerating AI product cycle. The firm expected Axon to deliver results exceeding its estimate of 30% revenue growth. TD Cowen highlighted that the company's AI product cycle was gaining momentum. The research firm also believed Axon deserved a premium valuation compared to its peers due to its durable end markets, high growth profile, limited competition, and a strong competitive moat.

Axon is up 7.2% since the beginning of the year, but at $639.60 per share, it is still trading 26.6% below its 52-week high of $870.97 from August 2025. Investors who bought $1,000 worth of Axon’s shares 5 years ago would now be looking at an investment worth $5,895.

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