Axon Enterprise: Share Price Will Follow Software And Sensors Margins

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About: Axon Enterprise, Inc. (AAXN)
by: Joseph Kowaleski
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Joseph Kowaleski
Growth at reasonable price
Summary

Guidance for 70% margins in software and sensors is baked into Axon's share price; risk is to the downside if guidance is even slightly optimistic.

Axon's competitive advantage is its sales channels; its products are not particularly innovative; Axon has grown by leveraging sales channels and products into cloud solutions.

Axon has structural advantages that should funnel the market down to fewer competitors; Axon helped itself in that process by acquiring VIEVU.

Despite these monopolistic properties, Axon's small TAM puts a ceiling on its runway for growth.

Axon is a quality business, but the current valuation offers little margin of safety considering the limited TAM.

Market Opportunity

Axon Enterprise (AAXN), formerly known as Taser International, has captured (no-pun intended) the lion's share of the move towards implementing body cams in law enforcement. This move has reinvigorated the company