We're Looking to Buy After Misunderstanding Drives Holding's Big Drop

Much like you, we saw the big drop in Axon AXON shares on Thursday, one that came with no ratings downgrade or price target cut on Wall Street.

The company made no news, nor did we see any fresh filings with the SEC — not surprising given we are in the pre-June quarter earnings quiet period. We did some further legwork, and we can tie the move in AXON shares to the 20% freefall in the shares of Byrna Technologies BYRN, a small-cap stock that sells less-lethal self-defense products, including handheld personal security devices, largely to the consumer market.

Byrna does not sell into the public safety and federal markets, nor does it offer body cameras, cloud and other software services like Axon. Byrna’s distribution points include Amazon AMZN, Sportsman’s Warehouse and other retailers, which makes it a consumer play, and in its SEC filings, the company clearly states its strategy is to be a “consumer lifestyle brand.” For 2025, Byrna is expected to deliver about $116 million in revenue compared to $2.65 billion at Axon.

To us, it’s pretty clear the two companies are like apples and oranges — very different. Supporting that view and reinforcing Byrna’s consumer reliance is its lack of deferred revenue, which stood at less than $0.5 million exiting May, compared to just over $1 billion for Axon at the end of its March quarter.

So why did BYRN shares drop 20% on Thursday?

During the company’s earnings call Wednesday night, Byrna management shared that it expects “consumer sentiment to remain subdued,” and that likely raised questions over the management team's forward guidance.

Given current market conditions, we can see how the drop in BYRN shares led some who don’t understand how different Byrna is from Axon to exit AXON shares. To us, this illustrates why it is so important it is to understand the companies you invest in, their market drivers, customers and the like. Knowing the difference allows us to take advantage of situations like this, especially when we continue to receive positive signals supporting our AXON thesis.

In Thursday's Daily Rundown video, we alluded to some confirming signals for public safety drone adoption, a positive for Axon’s drone effort, but also a feeder for its higher-margin cloud and services business. We’ll share those with you on Saturday, but we also found some additional signals last night:

“Oakland voters approve purchase of police body cameras, AI software… Voters signed off on the $126,000, five-year purchase contract with Axon at a special town meeting Wednesday.”

“Southern Maine police are testing new AI software to write their police reports”

“The Joliet Police Department is proud to announce that it is the first law enforcement agency in Illinois, and among the first in the nation, to implement real-time language translation technology through Axon Body 4 cameras.”

“The Connecticut Department of Correction has been tasked with developing a plan to implement the use of body-worn cameras for its corrections officers. Under a bill signed into law by Gov. Ned Lamont, the department has until February 1, 2026, to present a plan for implementation to the General Assembly.”

Later on Friday morning, after the market opens, we will take advantage of Thursday's drop to add additional AXON shares to the Portfolio. Based on the volume of signals we are seeing, we will also lift our AXON target to $840 from $825. Should we see AXON shares move lower further, that could give us reason to revisit our Two rating.

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