Please ensure Javascript is enabled for purposes of website accessibility

Why Axon Enterprise's Shares Jumped 22.1% Today

By Travis Hoium - Mar 19, 2020 at 3:44PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors think Axon's sell-off has gone too far.

What happened 

Shares of Axon Enterprise Inc (AXON 5.64%) jumped as much as 22.1% in trading Thursday as the market returned to some sort of "normal" trading. There wasn't any significant news out about the company, but that didn't seem to deter buyers of this growth stock. At 3:10 p.m. EDT, shares were still up 15.4% for the day. 

So what

Shares of Axon have dropped 30% in the past month as the COVID-19 pandemic has sent the market down as a whole. But sometimes stocks like Axon get thrown out with the bathwater as the market sells off, and that may be reversing course today. 

Police officer wearing vest, Body 3 camera, and signal sidearm holster while patrolling the street.

Image source: Getty Images.

The reality is that Axon's current business won't be significantly impacted by the outbreak. Law enforcement contracts will still be paid, which accounted for $161 million of recurring revenue at the end of 2019. And budgets for new equipment for 2020 will likely still drive new orders. The rate of new sales may slow and some agencies may be more cautious about spending money, but this isn't likely to be an existential crisis for Axon the way it is for cruise lines, airlines, or the restaurant industry. 

Now what

While there might be hiccups for Axon in 2020, I think the big decline in shares over the past month has presented a buying opportunity for investors. When COVID-19 passes (however long that is), the company will remain the top provider of tasers and body cameras for law enforcement, addressing an $8.4 billion market. That's what long-term investors should remain focused on, even if there are some short-term impacts due to turmoil in the economy and stock market. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Axon Enterprise Stock Quote
Axon Enterprise
AXON
$96.16 (5.64%) $5.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.