For several months now, we have been bullish on shares of TASER (TASR) behind a growing necessity for enhanced transparency within law enforcement due to an increase in police brutality. In March, we identified the Axon Body 2 as an optimal product to meet the market demand for increased law enforcement transparency. Since then, shares have rallied more than 30%. Shares are still short of our $27 fair value, but we think that two tragic incidents this week will rush Axon Body 2's demand and push shares higher.
On Wednesday night, 7/6, Philando Castile was shot and killed by a police officer in Minnesota. The shooting was recorded and streamed live by Castile's girlfriend, Diamond Reynolds, via Facebook Live. The footage went viral, and by Thursday morning, the shooting was a top news story. Reynolds says her goal in recording the shooting was that she "wanted everyone in the world to know" what had happened, specifically as it related to the police brutality.
Indeed, that is what the footage accomplished. It provided a more intimate and distressing view of what might have otherwise been another police shooting, so much so that one of the viewers wrote a comment on the video saying "Don't stop recording". The video called people to action, as protesters stood outside of the Minnesota governor's mansion for hours following the shooting, calling for reform. The shooting comes only days after a 37 year-old man was shot and killed by officials in Louisiana. Both of the men were African-American, and this similarity has prompted a swift response from the social group Black Lives Matter.
The two shootings bring the total number of fatal police shootings so far this year to 509, or around 84 per month, a higher rate than 2015's 83 fatal police shootings per month. The need for increased police transparency is greater than ever, and with social and political groups using recent footage to call for sociopolitical change, we believe police departments nationally will be unanimously forced to adopt mandatory body cam usage.
There will likely also be calls for greater smart weapon adoption. TASR is particularly leveraged to provide both because the company concurrently offers a connected cloud solution for data management, which the Chicago Police Department already employs.
In the past month, two major US police departments have deployed Axon Body 2 cams and/or TASER smart weapons. Jacksonville Sheriff's Office deployed 2,500 TASER X26P Smart Weapons while the Los Angeles Police Department ordered a contract to deploy Axon cameras to all 7,000 front-line officers. We believe LAPD's move is one that will become the norm within the next several quarters. As social and political pressures escalate, we will see Smart Weapon and Body Cam orders accelerate. We think this will push shares higher and closer towards our $27 fair value for the stock.
Disclosure: I am/we are long TASR.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.