What: Shares of TASER International, (NASDAQ:AXON) dropped 11% in January, in part because of a new lawsuit.
So what: Digital Ally filed a patent infringement lawsuit against TASER last month, claiming that the company's Axon camera system infringed on its patents. TASER was quick to say that the lawsuit was "frivolous and egregious," and that it would defend its products in court.
Interestingly, investors overlooked new sales to Washington DC, Baltimore County, and Omaha Police Departments for Axon body cameras and subscriptions to Evidence.com. The company also announced orders for more than 2,500 smart weapons from customers around the world.
Now what: TASER is in a strange position right now, rapidly growing its customer base, but not showing the profits investors had hoped for. That makes any negative news item, like a lawsuit, big news for traders to react to.
I would take more from the fact that Axon body cameras are now installed in 31 major cities, and the platform continues to grow. That's what investors should be looking for, and a dip like we saw in January could be a great entry point for investors who have been eyeing the stock.