Shares of taser and body camera company TASER International, Inc. (AXON -2.60%) plunged as much as 12.8% on Monday after losing a big contract to a competitor. As I'm writing, shares are near their daily low at 10:55 a.m. EDT, down 12.6%.
The New York Daily News is reporting the NYPD has chosen Vievu, not TASER International, as its supplier of more than 1,000 body cameras. This is a high-profile loss showing that competitors may be starting to gain traction in the market.
Another blow could come from the U.S. Supreme Court, which decided not to hear a case involving the death of a person after a Taser was used on them. The court let stand a ruling that said Tasers amount to an unconstitutional excessive use of force, and officers can only use Tasers if they're in immediate danger. This could negatively impact Taser sales, which are still the largest chunk of TASER International's revenue.
Both of these news items are incrementally negative for TASER International, but they're not a huge concern for investors long term. The body camera market is still growing rapidly, and from time to time, competitors should be expected to win contracts. What's important is that market share remains strong, which is still the case.
It'll take some time to sort out what the Supreme Court ruling will mean for the company. If Taser sales fall in coming quarters, this could be a reason why, but it may also just affect how Tasers are used, not whether or not they're sold.
At the end of the day, TASER International is still a well-positioned company in a growing market, and I see the drop in shares as an opportunity for long-term investors.