How Axon Enterprise Stock Slipped -40%
Between August 28, 2025, and February 24, 2026, Axon Enterprise (AXON) faced a challenging journey as surging revenue couldn’t mask a sharp profitability hit and hefty costs from new acquisitions. A steep valuation reset pulled shares down 43%, though late bookings growth hints the slide may soon reverse.
Below is an analytical breakdown of stock movement into key contributing metrics.
| 8282025 | 2242026 | Change | |
|---|---|---|---|
| Stock Price ($) | 781.9 | 442.5 | -43.4% |
| Total Revenues ($ Mil) | 2,391.6 | 2,558.0 | 7.0% |
| Net Income Margin (%) | 13.6% | 10.1% | -26.3% |
| P/E Multiple | 186.9 | 135.0 | -27.8% |
| Shares Outstanding (Mil) | 78.0 | 78.4 | -0.5% |
| Cumulative Contribution | -43.4% |
So what is happening here? Despite a 7% rise in revenue, the stock plunged 43% as profitability dipped 26% and P/E multiples fell 28%, signaling market concerns over earnings and future growth.
Here Is Why Axon Enterprise Stock Moved
- Profitability Pressure: Q3 2025 earnings per share of $1.17 missed consensus estimates by over 20%, resulting in a GAAP net loss and exposing high operating cost structures.
- Valuation Reset: Following the Q3 earnings miss, the stock declined over 17%, indicating a valuation de-rating as investor focus shifted from revenue growth to profitability.
- Hardware Margin Erosion: Q3 adjusted gross margin decreased by 50 basis points year-over-year, revealing profit vulnerability in the Connected Devices segment due to tariffs.
- Ecosystem Expansion Costs: The acquisitions of Prepared and Carbyne in late 2025 to build the Axon 911 platform incurred immediate costs, contributing to the period’s net loss.
- Recent Trajectory Change: Despite a multi-month decline, Q4 results on 2/24 showed full-year bookings grew 46% to $7.4B, signaling a potential reversal in trajectory.
Current Assesment Of AXON Stock
The core investment debate is centered around: Can high-margin (68%) SaaS growth outpace hardware margin (47%) compression from tariffs and product mix, driving consolidated margin expansion towards the 28% EBITDA target?
The prevailing sentiment appears to be neutral. Sentiment is pinned Neutral. Record bookings and best-in-class SaaS metrics provide a powerful growth story, but this is directly offset by tangible margin compression already appearing in results and persistent insider selling.
| Bull View | Bear View |
|---|---|
| The rapid SaaS revenue mix shift, supported by 35% ARR growth and 125% NRR, will mechanically drive blended gross margins higher, justifying a premium software valuation. | Persistent hardware margin pressure, evidenced by the recent 210 basis point drop in consolidated gross margin, will dilute software gains, breaking the margin expansion narrative. |
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