Axon Enterprise Draws Large Institutional Buys Despite Earnings Miss and Insider Sales
Major institutional investors significantly expanded their holdings in Axon Enterprise during the third quarter, even as the company missed Wall Street's recent quarterly earnings expectations and insiders continued selling shares.
Several major institutional investors substantially expanded their holdings in Axon Enterprise, Inc. during the third quarter, according to recent regulatory disclosures. Maryland State Retirement & Pension System raised its position by 6,258.0% by purchasing 256,702 shares, bringing its total to 260,804 shares valued at $110,195,000. Cabot Wealth Management Inc. boosted its stake by 11,781.7% to 223,139 shares worth $94,281,000, turning the stock into its largest holding. Ritholtz Wealth Management also acquired 218,264 shares to lift its position by 10,951.5% to 220,257 shares worth $93,063,000. Not all institutions added shares, however, as Allspring Global Investments Holdings LLC reduced its position by 50.3% to 86,636 shares.
The institutional accumulation follows a challenging period for the stock, which opened at $315.42 on Thursday. AXON shares experienced a 44.5% decline year-to-date and a 44.9% drop over the past year, trading far below their 52-week high of $665.07. The firm has a market capitalization of $25.68 billion and institutional investors collectively hold 79.08% of the stock. Meanwhile, GuruFocus assigned the stock a proprietary GF Value of $665.43, yet labeled it a possible value trap due to severe price volatility and valuation risks.
The broader downturn has been driven in part by recent financial results. In its report on November 5th, Axon posted quarterly adjusted earnings per share of $1.72, falling short of Wall Street consensus expectations of $1.89. Revenue grew 27.8% year over year to $908.55 million, but also missed the analyst target of $934.33 million. The company announced that federal contract delays shifted $130 million of expected revenue out of 2026. Following the report, several law firms initiated investigations into potential securities-law claims regarding Axon's earnings disclosure.
Amid the operational headwinds, company insiders have steadily trimmed their holdings. Over the past 90 days, insiders sold 37,397 shares valued at $21,234,034, with overall insider sales reaching $122.1 million over the past year against no recorded purchases. President Joshua Isner executed a pre-arranged Rule 10b5-1 sale of 16,775 shares for $9,636,063.25 on August 31st, and Chief Executive Officer Patrick W. Smith sold 10,000 shares for $5,089,900.00 on September 8th.
Wall Street analysts maintain a Moderate Buy consensus on Axon, with 13 Buy ratings and four Hold ratings, alongside an average price target of $612.18 according to MarketBeat. While Northland kept a $540 price target, other brokerages adjusted expectations downwards. Barclays lowered its price target from $688.00 to $507.00 while maintaining an overweight rating, and Craig Hallum downgraded the shares from buy to hold with a $390.00 target on November 6th. Analysts also look toward Axon's planned $1.2 billion investment for a 37% stake in drone maker Skydio as it works to distribute hardware and software products to U.S. public-safety agencies.