Axon Stock Is Down 46% From Its High. Here’s Why the Business Doesn’t Reflect That

Key Stats for Axon Enterprise, Inc.

• 52-Week Range: $339.01 to $885.92
• Current Price: $539.20
• Street Mean Target: $673.15
• Market Cap: ~$44.1 billion
• Q1 2026 Revenue: $807 million, up 34% year-over-year
• Q1 2026 Software & Services Revenue: $355 million, up 35% year-over-year
• Q1 2026 Adjusted EBITDA: $202 million (25% margin)
• Annual Recurring Revenue: $1.5 billion, up 35% year-over-year
• Future Contracted Bookings: $14.3 billion, up 44% year-over-year
• Full-Year 2026 Revenue Guidance: 30% to 32% growth

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A 46% Drawdown in a Business Still Growing at 34%

Axon Enterprise (AXON) is one of the more unusual situations in the market right now. The company makes public safety technology, a category that includes TASER devices, body cameras, drone and counter-drone systems, and a growing suite of AI-powered software tools for law enforcement agencies, corrections facilities, and enterprise customers.

It is founder-led, has never posted a down year in revenue in its public history, and just delivered its ninth consecutive quarter of 30%-plus growth. The stock is down nearly 40% from where it opened the year.

The chart above tells the story of a difficult 2026 for AXON shareholders. The stock peaked near $886 in early January, then sold off sharply through late January, briefly recovered, and then fell again in a second, deeper wave that hit a 46% drawdown on April 10.

A strong recovery carried the stock back to near its highs by late June, before another pullback brought it to where it trades today, about 15% off those recovery highs. None of this was driven by deteriorating fundamentals.

Revenue accelerated, and guidance was raised. The selloff was a valuation reset, the market repricing a stock that had been priced for perfection at the start of the year. The question now is whether the current price reflects a better entry point or simply a more honest one.

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Nine Consecutive Quarters of 30%-Plus Growth Tells You Something

The revenue chart below is one of the cleaner growth stories you will find in a company of this size. Axon went from $863 million in annual revenue in 2021 to $2.78 billion in 2025, with no dips, no flat periods, and consistent annual acceleration. Consensus estimates carry that trajectory to roughly $3.66 billion in 2026, $4.73 billion in 2027, and approaching $7.1 billion by 2030.

What’s driving the consistency is the platform model. Axon doesn’t just sell hardware. It sells an integrated ecosystem in which TASER devices, Axon Body cameras, fleet systems, digital evidence management, and AI software all feed into one another, locking customers in through long-term subscriptions.

Software and Services revenue, which carries gross margins above 72%, grew 35% year-over-year to $355 million in Q1. Annual recurring revenue reached $1.5 billion, also up 35%.

Net revenue retention held at 125%, meaning existing customers are spending meaningfully more each year than they did twelve months prior. Future contracted bookings climbed 44% to $14.3 billion, providing significant visibility into revenue for years ahead.

The newer growth vectors are early but moving fast. AI products within the Software and Services segment, including Draft One, which uses body camera footage to automatically generate police reports, and Axon Assistant, an AI interface that has now exceeded one million uses in the field, grew over 700% year-over-year. Counter-drone revenue through the Dedrone platform was up over 300%.

CEO Rick Smith framed the ambition in the shareholder letter: “We are breaking down information barriers and providing a secure, compliant foundation to help prevent harm, accelerate justice, and protect life in the communities our customers serve.”

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What the Valuation Model Says About the Path Forward

The TIKR valuation model puts a mid-case target of around $1,499 on AXON stock, implying roughly 174% total return from today’s price over approximately 4.5 years, or about 25% annualized. The low case yields an IRR of roughly 14%, while the high case approaches 26% annually.

A few things are worth noting about how these scenarios are constructed. The mid-case assumes revenue CAGR of around 23% and net income margins expanding toward 19%, which is reasonable given the trajectory of the Software and Services mix.

Importantly, all three scenarios assume some compression of the P/E multiple over time, meaning the return is driven entirely by earnings growth rather than by the stock receiving a higher valuation. Investors are not being asked to believe the multiples expand; they are being asked to believe the business compounds.

The Street is more constructive in the near term, with a mean target of around $673, implying roughly 25% upside from current levels. Given that the stock traded near $886 just seven months ago, the current setup reflects a meaningful valuation reset even before fundamentals are considered.

Should You Invest in Axon Enterprise, Inc.?

Axon Enterprise is a rare combination: a founder-led business with genuine mission clarity, a subscription platform that generates consistent 30%+ growth, and a stock that has just experienced a 46% peak drawdown, with the underlying business intact.

The risks are real. The stock still trades at a significant premium to forward earnings, government contract concentration creates budget sensitivity, and the path to margin expansion requires continued improvement in software mix.

For investors with a multi-year horizon, the selloff has created a more honest conversation about price. Use TIKR to track annual recurring revenue growth, net revenue retention, and the trend in future contracted bookings heading into the Q2 report.

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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!