It's been a little more than a week now since TASER (NASDAQ:AAXN) stock went on its tear. Sadly for TASER shareholders, this stock has already come full circle.

Taser Axon

Taser's Axon Body and Flex Cameras. Image source: TASER International.

Last week, if you recall, the stun-gun-cum-body-camera company announced a "major" contract win to outfit 22,000 officers of the London Metropolitan Police with Axon body cameras. Within hours of the news breaking, TASER stock had soared nearly 9% in value.

During the days since, however, TASER shares have steadily given up all their London gains -- and circled back to land actually below their pre-announcement price. All of which raises the question: Who was right? The investors who bought TASER on the London news -- or those who dumped their shares after they learned the details?

The details
According to TASER, these details are actually in flux, and "still being negotiated at this time." The company does not plan to provide any further information on the London contract until it releases its full-year 2015 financial results in February 2016.

The bare bones of the contract, however, are known. For one thing, "all frontline officers" in the London Met will be outfitted with Axon body cameras. With 31,000 officers serving in the force, TASER's reference to 22,000 "frontline" officers suggests that this truly will be a complete rollout to every London police officer not permanently deskbound.

That's a pretty momentous decision, and it follows the conclusion of a trial run outfitting 1,000 Metropolitan police officers with Axons -- resulting in a "33-percent reduction in complaints against officers." But how much will it really be worth to TASER?

The numbers
TASER shares jumped as much as $1.60 on the day the London news was announced. If you multiply that by 52.4 million shares outstanding, that equated to about an $84 million increase in market capitalization for TASER stock -- or $3,810 in extra market cap per Axon sold.

Yet, according to TASER's own price list, even the most modern Axon camera, the Axon Body 2, costs only $399. Clearly, therefore, investors overreacted to the news when they bid up TASER shares last week. But just as clearly, investors' decisions to bid TASER shares down back below what they cost before the news broke was also wrong.

Here's why:

"It's the [economics], stupid"
When it comes to calculating Axon's value to TASER's bottom line, the price of the Axon camera itself is almost an afterthought. What really matters is the money that TASER makes from selling data storage service for video that Axon records.

TASER's Unlimited EVIDENCE.com storage plan, for example, charges police departments $79 per month, per Axon, to store data for easy retrieval. Over the course of a year, each Axon sold can therefore generate $948 in EVIDENCE.com revenue on top of the $399 sales price.

Granted, not all EVIDENCE.com subscriptions are as pricey as the "Unlimited" service. Some cost less. One plan even costs more. But using $79 as a ballpark price, the sale of even one single year's use of Axon-cum-EVIDENCE.com does appear to mean about $1,000 in new revenue for TASER.

Maybe that's not worth $84 million in additional market cap for the stock -- but it's certainly worth something. Even if TASER shares aren't worth the $19 and change that investors were (briefly) willing to pay for them last week, the shares are certainly worth more than the $18.24 they were selling for before the London news broke.

And that's the real import of today's story: Once "overbought," TASER shares are now almost certainly "oversold" -- and worth a close look with a view to buying.

Rich Smith does not own shares of, nor is he short, any company named above. You can find him on Motley Fool CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 318 out of more than 75,000 rated members.

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