Axon stock price has been one of the best performers in the past few years as demand for tasers jumped. The AXN share price has jumped by over 800% in the last five years compared with the S&P 500 Index, which rose by 91%. It has jumped by 130% in the last 12 months, bringing its market cap to over $53 billion.
Axon growth is continuing
Axon Enterprises is one of the biggest players in the security industry. It is a top firm that operates largely as a monopoly in the US, providing its tasers to law enforcement facilities nationwide.
Axon has also expanded its offerings over the years to include other products like body cameras and drones. These products have been in high demand as the perception of the rising crime rate in the US continues.
This, in turn, has led to a surge in its annual revenue, which has jumped from over $680 million in 2020 to over $2.2 billion in the trailing twelve months (TTM). Axon has also become a profitable company as its annual profit rose to $377 million last year from a loss of $69 million in 2021.
The most recent results showed that Axon’s revenue rose by 31% in the last quarter, helped by its software solutions that have continued to gain market share and have robust demand.
The company generated a net income of $88 million, representing a margin of 14.6%.
Analysts expect that Axon’s business will continue thriving in the coming years. The average revenue estimate for the second quarter is $640 million, up by 27% from the same period last year.
Axon’s annual revenue for the next two years will be $2.6 billion and $3.25 billion, representing an annual growth rate of over 20%, higher than other companies in the industry.
Valuation concerns remain
There are concerns about Axon and its products, including their safety. The main concern in the stock market is that its business has become highly overvalued as its market cap has jumped to over $53 billion.
Axon’s valuation implies a forward 2026 price-to-sales ratio of 16, higher than that of most faster-growing and higher-margin companies.
Axon has a forward price-to-earnings ratio of 102, making it more expensive than popular AI companies like Palantir, NVIDIA, and Amazon.
It also has a price-to-book metric of a whopping 21, making it one of the most overvalued companies in Wall Street. This means that it will need to keep growing at a faster pace to justify this valuation.
Axon stock price has triple-topped
The other risk that Axon share price faces is that it has formed a triple top chart pattern on the daily chart. This pattern is characterized by three peaks, which, in this case are at the resistance point at $700, while the neckline is at $475, its lowest level on April 7.
Therefore, there is a risk that the Axon share price will drop in the coming weeks. If this happens, a drop to the neckline at $480 cannot be ruled out. A move above the triple top level will point to more gains.
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