Entering text into the input field will update the search result below

After The Big Pop, Axon Stock Is (Finally) Fairly Valued

L&F Capital Management profile picture
L&F Capital Management


  • AAXN is positioned for huge growth over the next 5-10 years, thanks to the rapid digitization of the law enforcement industry globally.
  • At $38, though, AAXN stock is more than fully valued.
  • We are buyers on substantial dips below $37.

Back in early August, we outlined a case for Axon (AAXN) stock to get to $60 within the next five years. After a huge beat-and-raise quarter, AAXN stock is well on its way to that level, trading at $38 as of this writing and up 70% from its August lows. Although AAXN has long been one of our favorite investments, we think that this recent pop has propelled AAXN stock into fair value territory. We think AAXN stock is presently worth around $37 and, consequently, do not see favorable asymmetry in owning shares at current levels. All in all, we are using this rally to take profits off the table but will look to re-enter on a substantial drop.

We have been pounding on the table for some time about the strength of the underlying growth narrative supporting AAXN stock. At first, the growth narrative was all about smart weapons and body cameras adding necessary transparency to and removing lethal force from law enforcement amid an era wherein police brutality was a political hot button and a media hot topic. The whole narrative was about AAXN providing a solution for controversial police shootings by adding video footage to the mix.

While that narrative remains true today, it has since become only a part of the entire AAXN growth narrative. AAXN is now revolutionizing all parts of the entire law enforcement industry with technology. The company has rolled out new products like Evidence.com (back-end digital storage solution), Axon Fleet (car camera), Axon Dock (charging station and data download port), Signal Sidearm (a device which starts video capture as soon as a firearm is removed from a holster), Axon Citizen (mobile app which allows witnesses to upload footage to police's Evidence.com system), and Axon Interview (video capture designed for police interrogations), among much more. Between all these new products, AAXN has sewn itself into every

This article was written by

L&F Capital Management profile picture
L&F Capital Management, LLC, is a quantitative investment management group located in San Diego, California. Our multi-strategy investment approach comprises a mix of event-driven trades and long-term value investments, utilized together to maximize profit in both short and long term scenarios. We maintain consistency in portfolio mix through our long-term value holdings, but stress flexibility in portfolio mix from our daily event-driven trades. We believe this mix of flexibility and value generates both short and long term profits while reducing exposure to market volatility. L&F also shares various trade and investment opportunities through Seeking Alpha. For more information, visit www.lfcapitalmanagement.com.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in AAXN over the next 72 hours. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (11)

Good1 profile picture
Sold some to take profits but still hold a truck load bought at $5.00 after the big one. Ha ha ha! Forward look on AAXN is excellent. I'll call attention to their new CFO who is outstanding. Watching every nickle and bringing serious discipline into operations.

If you miss this part you are missing the whole show. This company is only getting stronger.
Companies stock creeping up under the radar !
Cambridge STR profile picture
Amazing how this stock keeps climbing. Momentum stock chasers may be opening positions in AAXN since new 52-week highs are being achieved (actually all-time highs). I'm buying more shares next week regardless of the price and will continue each quarter.
Do you see fundamental bullishness as well or only technical based bullishness?
Cambridge STR profile picture
Both fundamental bullishness and technical based bullishness with be pushing AAXN up.
Seems that there’s a decent amount of resistance at $40, which is an area where it seems LT holders are taking profits. Still a good number of shorts out there though, so if it breaks resistance could still be sizable upside in the near term.
rod_s profile picture
The AI piece is VERY interesting. The realm of data and predictive law enforcement gets me gitty. I am one of those guilty of being scared off by the SEC "investigation" which turned out to be nothing, and closed my short puts way in the low $20s. Currently looking at the June $45/$50 bull call spread and selling the $38 puts. Too aggressive?
JW5000 profile picture
Seems pretty aggressive as the stock may be put to you and your calls may expire worthless. Of course, you could close out at any point in time. Personally I'm looking to sell calls at the high end of the trading range. This stock loves trading ranges.
JW5000 profile picture
I agree but the stock needs to establish a trading range after its big pop. Doing anything before that happens is risky because there is still short covering that needs to happen. If it settles into a $35 to $40 range then it makes sense to sell some covered calls with strike price $40, but selling now, buying back at say $35 and then selling again at $38 makes little sense. $3 per share is not worth it when you could capture $2 to $3 by selling the calls.

If you are waiting for it to drop below $30 again, you may find yourself in the same boat as those who were waiting for it to drop from $27 to $20 and instead missed out on the rise to $39 and change.
Cambridge STR profile picture
With Axon's main customer being government agencies worldwide, this stock is essentially recession-proof.

I like the write-up above as a conservative take on Axon's potential. I would add in the coming years, we are likely to see additional uses of Axon cameras and video storage service outside of law enforcement. This would place the global TAM well above $6B.
I agree with William that the article paints a nice conservative picture of Axon’s growth. One key piece missing is any consideration of future revenue streams. Axon is building out it’s AI and there are tons of potential opportunities out there that have not even been considered. Good AI requires large amounts of data. Axon has treasure troves of data, including video recordings, images, etc. There are many routes that Axon could go in the future to monetize new revenue streams through the introduction of AI. For example, how about an augmented reality glasses product that uses facial recognition software to immediately pull someone’s criminal history just by having an officer look at them on the street? What about some form of predictive analytics whereby the AI searches through the data, looking for possible red flags to attempt to stop crimes before they happen? These are just two possibilities, but in truth there are likely countless ways the AI could be monetized, some of which I’m sure we can’t even comprehend at the current moment. I understand the difficulty of assigning a tangible value to these intangible “what-ifs”, but excluding them from consideration completely also doesn’t seem appropriate. Does an investor value Tesla solely on their current product offerings or is there some intangible value assigned to future applications that have not yet been disclosed? Why would the approach to Axon be any different?
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.