Here's Why We Added to Our Axon Position (original) (raw)

Calmer heads led us to take advantage of this pullback in Axon shares.

* Earlier today we added to our position in Axon shares - here's why.

* The usually quiet Axon management team will be presenting at two more upcoming conferences in the next few weeks.

Over the last several days, Axon Enterprise (AXON) shares have traded off following a mini wave of director selling that began on May 13, and the company. In aggregate, that mini wave was a very modest share count of just under 8,300 shares across 10 directors. When we dig into these transactions, we find the majority of those sales are tied to time-vested restricted stock units.

As we’ve discussed over the last week plus, the market mood has moved into Greed and Euphoria per the Money & Greed Index and Citi’s Euphoria/Panic model, we can see there is some "shoot first, ask questions" later happening. It also doesn’t help that Axon tends to be one of those rather quiet companies.

When we look at the move in the shares from 300tothecurrentsharepricearound300 to the current share price around 300tothecurrentsharepricearound285, we would suggest that is a sizable move lower in response to very modest selling. The silver lining is the pullback shrank the portfolio’s position in AXON shares to one where we could scoop up another handful of shares.

Adding to our decision to make this latest trade in AXON shares, earlier this week, Axon President Josh Isner presented at the J.P. Morgan Global Technology, Media and Communications Conference. Coming off the company’s recent quarterly earnings report that led to a number of price target increases, including our own, Isner gave an upbeat presentation discussing the medium to longer-term opportunities for the company.

Interestingly, Isner referred to Axon as a connected device company, which as we think about the relationship between its content-creating body camera and the growing cloud and services businesses makes sense. It also cements the view that Axon is now far more than just a Taser company.

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Isner also discussed the company’s recent Dedrone drone acquisition and how it opens Axon to the Drone as a First Responder market that dispatches a drone first and captures live video of the event. This builds on our thinking Axon’s drone offering is another tailwind for the higher-margin cloud business as well as the recurring revenue stream.

Isner said the Taser product is moving into other markets including hospital security and private security, and confirmed the company’s body camera business is seeing adoption in retail and healthcare markets.

Axon will be presenting at the Craig-Hallum 21st Annual Institutional Investor Conference on May 29, and Baird’s Global Consumer, Technology & Services Conference on June 5. We expect those presentations will showcase the opportunities ahead for Axon and could reignite investor enthusiasm for its shares, especially as public safety spending continues.

At the time of publication, TheStreet Pro Portfolio was long AXON.