Key Takeaways
- Axon fell 19% over three months to $428, now 42% below its 52-week high, even after raising 2026 revenue growth guidance to 32% to 34%.
- A $1.15 billion 0% convertible note sale in September sent shares down about 10% in a day on dilution worries.
- Future contracted bookings grew 41% to $15.1 billion, while Motorola Solutions’ $15.6 billion backlog grew 11%.
- Axon reports November 5, a day after Motorola, and CFO Brittany Bagley expects the fourth quarter to deliver “really attractive growth.”
Axon keeps growing above 30%. Its stock keeps falling anyway.
Axon Enterprise (AXON) closed Friday at $428, down 2.4% on the day and 19% over three months. That leaves it 42% below its 52-week high of $738. Wall Street’s average target of $680 implies 59% upside.
Motorola Solutions (MSI), Axon’s main rival in body cameras and police software, reports third-quarter results after the close on November 4. Axon follows on November 5. Motorola grew second-quarter sales 13% to $3.1 billion and agreed to buy counter-drone company D-Fend Solutions for $1.5 billion.
So investors get a read on public safety budgets one day before Axon speaks.
Two hits since August
The slide started with the second-quarter report. Revenue rose 35% to $904 million, the 10th straight quarter above 30%, and management raised its 2026 revenue growth outlook to 32% to 34%. Yet gross margin disappointed, and the stock slid about 14%.
Then came the financing. On September 15, Axon launched a $1 billion offering of 0% convertible notes due 2031, later upsized to $1.15 billion. Shares fell about 10% to $442 that day.
- The conversion price is about $652, roughly 52% above Friday’s close.
- Capped calls limit dilution up to about $1,050 a share.
- Axon pays no regular interest, but holders can convert into stock.
The appetite for cash makes sense once you look at the flow…
Free cash flow was negative $1 million in the second quarter. Axon held $685 million of cash and short-term investments against $1.8 billion of senior notes, and CEO Patrick Smith sold 10,000 shares for $5.08 million in September.
The backlog is doing the talking
Look past the share price and the business still looks strong. Future contracted bookings rose 41% to $15.1 billion, and annual recurring revenue climbed 39% to $1.6 billion. Net revenue retention reached 126%.
AI is an early driver. Revenue from the AI Era Plan, which bundles tools like Draft One, grew nearly 700%. Software and services revenue rose 36% to $398 million.
That bookings figure stacks up well against Motorola. Its second-quarter backlog hit a record $15.6 billion, up 11%, on quarterly sales more than three times Axon’s. “Q2 was exceptional across the board,” Motorola CEO Greg Brown said in the release.
Will that backlog turn into revenue on schedule?
Consensus calls for about 31% annual revenue growth over the next two years, including roughly $937 million in the third quarter.
TIKR tracks 21 analysts on Axon Enterprise. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Axon Enterprise, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Axon Enterprise’s Analyst Ratings
Paying up for future margins
Profit is the harder question. Axon’s GAAP EBIT margin over the last twelve months is just 1.7%, while management targets an adjusted EBITDA margin of about 25.5% this year.
Investors still pay a full price on forward numbers: 48.0x earnings and 33.4x EBITDA. And against Motorola, the profitability gap is wide.
Axon’s premium rests on closing that gap as bookings convert into higher-margin software revenue.
Bagley has pointed investors to year-end. “We really expect Q4 to be the quarter where you see some really attractive growth,” she said on the second-quarter call.
My take: The 42% drawdown has pulled the valuation back from extreme, and the bookings data still supports 30% growth. But a 0% convert, thin free cash flow and a 1.7% GAAP margin mean the stock needs proof. I’d wait for a clean quarter before buying.
Thursday’s report has to show three things: gross margin recovering, bookings still growing near 40%, and a fourth-quarter guide that backs Bagley’s promise.
So what is Axon stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Axon could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
