Why TASER International Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of TASER International (NASDAQ: TASR  ) were getting shocked today, falling as much as 13% after it lowered prices on two of its products.

So what: The maker of the eponymous electronic weapon said it would drop prices on its Evidence.com and its Axon Flex cameras. The Axon Flex price tag was slashed nearly in half from $949 to $499, while Evidence.com subscriptions will now start at just $9.99/month. Taser cited the "tight budgetary environment" for the move, explaining that the new pricing addresses the challenges of affordability and predictability that law enforcement budgets face.  

Now what: Despite the weak economy and widespread public-sector cutbacks, Taser shares have been on fire recently, nearly doubling in the last two months after a judge ordered New York City police to wear body cameras in response to complaints about the city's stop-and-frisk program. Taser's high valuation seems to be based on expectations that police video-camera adoption will become mainstream, but with the economy still pressuring local budgets, this transition is far from guaranteed. The niche industry may take off, but Taser looks like a high-risk play right now.

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