Axon Enterprises (AXON 0.52%) may have a strong footing as a great mid-cap opportunity for investors, but this company isn't without risk. 

In this "Industry Focus" video, recorded Dec. 1st, Emily Flippen and Brian Stoffel examine a few key risks that have the potential to hurt Axon down the road. 

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Emily Flippen: What breaks the thesis for Axon? We talked about this being a great mid-cap opportunity, one you have to pry from your hands headed into 2022.

But, when I think about what ruins it for me, I will say that if Rick Smith steps away, I think I will really have to think twice about this investment. Because his mission, right? Eradicating the bullet -- that is a big mission. And I have a hard time imagining somebody who would step into his place with the willingness and the ferocity to execute upon that idea that will be necessary to make Axon a market-beating investment for the next 5 to 10 years. So for me, I think that's a big one.

But, what else stands out to you as something that you think could be thesis-breaking for Axon?

Brian Stoffel: Well, I agree with you. I think that's part of it, too. This has been a family ordeal. His dad helped them get off the ground and was on the board of directors until he passed away earlier this year. So, this matters in his bones.

But, beyond that, I already called out the FTC case. I don't see that being necessarily thesis-breaking, but I also don't think that we can completely ignore it. The other is just a culture issue.

Look, I've spent zero time in Axon's headquarters. And as someone who writes articles, I know how we can talk like we know what's going on and not really know what's going on. But, I've read articles that raise my antenna a little bit about the culture that's present at Axon, and this is something you have to get right. Because, you are dealing at this intersection -- What Axon is trying, and I think successfully doing, is they are at the intersection of two groups that -- at least in the media -- are not getting along very well. And that is the police force and people who have gripes against the police force.

The thing that's amazing is that the product works really well for those that are acting virtuously on each side. Making sure that the culture works is important for that, too. So, I look at -- yes, Rick Smith stepping down -- but the culture is the other big one. And those two might interplay as well.

Emily Flippen: That's so interesting because to be frank, I didn't even consider the culture as a risk, but I think that's a wonderful risk to point out.

For me, I imagine risk here on two sides. One, is the valuation of the business itself. So, just the share price. This is a loftily valued business. They do have a subscription backlog of over two billion dollars. So, keep that in mind if you're just looking at that revenue. But, I do worry that if international expansion fails to catch on, even if the consumer market doesn't catch on like some investors expect it may, those could be things that show slowing growth which could hurt this business.

However, I think the biggest risk is what you mentioned there, just regarding the core customer, the people that they're serving. And we can talk all day about how tasers are a mostly non-lethal way of enforcing things like domestic security for police forces. But ultimately, we're talking about a very politicized issue that has people on either side of the fence, many of whom say to the extremes of, "Well, let's defund the police."

Guess what? Defunding of the police is the defunding of Axon, too. When you talk about removal of police budgets, that can hurt Axon. Even the pullback in police budgets can impact Axon. Now management will say, look, we're trying to fix a problem, we're not trying to be a part of the problem. But, there's going to be issues in media especially if we start talking about going after the consumer market, about what role, if any, Axon has in some sort of police brutality. If that comes to fruition, if that conversation is held, you can expect that this business and the stock will have very volatile results.

Brian Stoffel: I'll put it to you this way. The minute that their North Star changes from protecting life, and that means everyone's lives -- that means police officers' lives, it means lives of those that are in the communities where the police officers are -- the minute that it comes off of that, is the minute that I'm out. Because there is enormous potential for abuse here.

There's also enormous potential for good. I don't think you can have one without having the opportunity for the other. Right now, I believe in Smith and I believe in the mission. But, if that changes, the tide can turn against them rather quickly.