What Happened?
Shares of aerospace and defense company AXON (NASDAQ: AXON) jumped 18.3% in the morning session after the company reported strong fourth-quarter results that blew past analysts' revenue, EPS, and EBITDA expectations. This is a relief for a stock that saw drastic recent declines as Wall Street firm Northcoast Research reported that Axon had lost an important partnership and that this former partner could turn into a competitor. As for the quarter, revenue surged 33%, marking Axon's third consecutive year of 30%+ annual growth. Notably, its Cloud & Services segment grew 44% while annual recurring revenue rose 37% to $1.0 billion, demonstrating the strength of its subscription-based model. Margins stayed healthy, with net income at 24% and adjusted EBITDA at 25% for the quarter. On top of that, its full-year sales outlook came in above Wall Street's estimates. Zooming out, we think this quarter featured some important positives.
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What The Market Is Telling Us
Axon’s shares are somewhat volatile and have had 13 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 6 days ago when the stock dropped 12% on the news that Wall Street analysts reassessed the company's strength after it ended its partnership with Flock Safety. Craig Hallum downgraded the stock from Buy to Hold, citing several factors: (1) a seasonally slow Q1, and (2) hiring freezes and federal spending reductions.
Axon is down 2.6% since the beginning of the year, and at $580.71 per share, it is trading 18.2% below its 52-week high of $710.01 from February 2025. Investors who bought $1,000 worth of Axon’s shares 5 years ago would now be looking at an investment worth $7,223.
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