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Why Axon Enterprise Is Soaring 20% Today

By Rich Duprey – May 8, 2020 at 12:47PM

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It didn't hurt that the stun gun maker handily beat Wall Street's earnings forecasts.

What happened

Shares of Axon Enterprise (AXON 1.12%) were soaring 20% higher in midday trading after the stun gun maker trounced earnings expectations and also beat revenue forecasts.

So what

The maker of Taser has bundled its revenue streams into conducted electrical weapons, Axon body cameras, and cloud software, and it has reported revenue of $147.2 million, well ahead of the $131.7 million that Wall Street had been anticipating, generating profits of $0.40 per share, which galloped well ahead of predictions of just $0.18 per share.

Police officer wearing Axon body camera and Taser

Image source: Axon Enterprise.

In particular, Axon saw a 38% surge in international sales, especially in the U.K., Australia, and Canada, as well as its entry into two new markets in Asia and Latin America.

Although there have been only a few instances of Axon's customers delaying orders for its products, the company is pulling its guidance for the full year, in which it saw adjusted EBITDA of $100 million to $105 million on revenue of $615 million to $625 million.

Now what

While the strength of Axon Enterprise's earnings beat helped lift its shares, it may have gotten an assist from the fact that its stock is a popular one to short, with 8% of its shares outstanding sold sort, or nine days to cover based on volume (anything over seven is considered a lot).

The big beat would have caused Axon's stock to rise, leading shorts to rush to cover their positions, helping to push shares even higher.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Axon Enterprise. The Motley Fool has a disclosure policy.

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