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Why Axon Enterprises Stock Just Popped 8%

By Rich Smith - Updated May 4, 2018 at 4:24PM

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Another competitor bites the dust.

What happened

Shares of Axon Enterprises (AXON -0.76%) stock -- the company formerly known as Taser until it decided its real future lies with selling Axon body cameras for police -- jumped as high as 10% in early trading Friday and were up a good 8% as of 3:30 p.m. EDT.

The reason? This morning, Axon announced it's agreed to buy its longtime rival Vievu.

Woman artist painting wall art of big fish eating smaller fish

If you can't beat 'em, eat 'em. Image source: Getty Images.

So what

As explained in the press release, Axon is buying Vievu from its parent company, Safariland, for an undisclosed sum and merging that company's body-camera business into its own. Safariland, in turn, will become Axon's "preferred holster provider for Axon's TASER" stun guns for at least the next 10 years.

This is a big deal for Axon, which at one point was able to say that Vievu was the only company that had successfully beat it out for a contract to supply police departments with body cameras. Eliminating that competition by buying it out is obviously a positive for Axon's business -- assuming the buyout didn't come at too high a price.

Now what

With Vievu out of the picture, Axon's toughest competition in the body-camera space probably comes from longtime rival Digital Ally, a tiny company with barely 4% of Axon's annual sales and less than 1% of Axon's market cap. Although legal disputes are ongoing between the two companies, if Digital Ally is the biggest threat Axon has to worry about going forward, I suspect Axon investors have little to worry about.

Today's rally is justified.

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