What happened

Shares of remote-restraint device company Wrap Technologies (NASDAQ:WRAP) spiked higher on Tuesday, after this kind of technology was highlighted by a speaker at the Republican National Convention (RNC). While Wrap Technologies' flagship product, the BolaWrap, wasn't mentioned by name, the speech was a reminder that some view it as an important part of police reform.

As of 2:30 p.m. EDT, Wrap Technologies stock was trading 12% higher, though it had traded as much as 18% higher earlier in the session.

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Image source: Getty Images.

So what

Georgia State Rep. Vernon Jones, a Democrat, was a speaker at the RNC. Jones is a proponent of additional funding to improve law enforcement agencies. In his RNC speech, Jones mentioned the need for non-lethal remote-restraint devices, which is what the BolaWrap by Wrap Technologies is. 

The BolaWrap wasn't mentioned by name, but Jones likely had it in mind when he made his speech. At a July roundtable event, Jones mentioned the BolaWrap by name to President Donald Trump as a tool that could make law enforcement better and save lives in the process.

Wrap Technologies stock has been steadily falling for weeks, and was down about 50% from 52-week highs prior to today's pop. Investors were likely getting nervous with the growing movement to defund the police. If that happens, agencies will have less funding to purchase equipment like the BolaWrap. But today the stock is getting a boost as investors hope it's viewed as part of the solution.

WRTC Chart

WRTC data by YCharts

Now what

For long-term investors, Jones' speech at the RNC doesn't tangibly help Wrap Technologies. It does bring high-profile attention to the BolaWrap, which could help increase sales. But the company will still have to work hard and spend heavily to ensure the product's long-term adoption.

In the second quarter of 2020, Wrap Technologies completed many BolaWrap sales, leading to record revenue. But Q2 revenue was still quite small -- less than $1 million. By comparison, it spent $2.5 million in sales, general, and administrative expenses as it endeavors to market its device. This shows that, while the technology is promising, Wrap Technologies is only for investors with a very long time horizon. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.