[00:00] Donald Trump just disclosed a buying stock in the maker of tasers and body cameras, but you might be wondering why would he buy the stock? Well, it's probably because they do a lot more than just tasers and body cameras now.
[00:14] And in this video, we're going to break down what this company is, what their margins look like. Is it training for a fair price? Is it worth buying at these levels? What's my opinion on it all? Not personalized advice, but let's get into it.
[00:28] And the first thing you got to know is that Donald Trump disclosed buying between $1.5 million of axon, specifically on February 10th. That just conveniently happened to be two weeks before ice or customs happened to announce a $220 million
[00:46] dollar taser contract to buy 17,800 devices, along with literally, quote, unlimited cartridges and training, keeping in mind that extra cartridges tend to increase the cost of these contracts.
[01:04] But we don't of course have the details of the complete ice contract, but the point is Donald Trump bought stock in axon. And it raises the question of should you also buy stock in axon?
[01:16] So in case you're not familiar, axon does a few different things. They're famous for their tasers and their police products. So you've got multiple different taser products here, but they're also famous for their body camp, which body
[01:29] camps, which there's been a lot of talk about even ice agents starting to have to wear body cameras. So who knows, maybe there is a desire to get into the stock before even more orders come in.
[01:41] But I'm sure you've seen this before, the police tasers, the less lethal use of force tools here to potentially take down bad guys. But anyway, topic on taser aside, let's focus on what they do that most people don't think about.
[01:57] So a lot of people don't think about is the fact that axon is now integrating artificial intelligence with pretty much everything they enable officers to do. So when it comes to report writing, literally transcribing what the body camera heard and then writing the report off of that, collecting data from people's drivers licenses and submitting it to run criminal background checks automatically.
[02:24] These are things that are being built into what axon does and sells to police departments. Now historically, a lot of people have been really concerned that hey, like this is only a government style stock.
[02:38] Like why do we only want exposure to, you know, police departments, their budgets are unpredictable and they can kind of go along with the political spectrum. Right, you get a bunch of right wingers who win, maybe we get more police spending, whereas you get a bunch of left wingers who win, maybe you don't.
[02:55] And then as a stockholder, you're kind of holding the bag on those swings, either good or bad. Well, that's where axon has gotten really interesting. See, not only are they starting to incorporate artificial intelligence into what they're doing with their body cameras or their other equipment, but they're also starting to broaden out to enterprise.
[03:17] See, they've announced a $40 million telecom deployment, which has to do with their fuses product, their fuses software. And really what it does is it takes some video streams and tries to apply intrusion detection or other potential customer tracking or people tracking or vehicle tracking and apply that AI technology.
[03:40] Not just for uses in the public space, police, homeland security or whatever, but also to private enterprises like banks who might want to put this on outposts plus light post outside their building, which a lot of this feels I have to say, you know, kind of like Orwellian, these cameras even sort of look a little intense.
[04:01] But that's the idea here is they're trying to expand their total addressable market to not just governments, but also private enterprises. Going back to the government for a brief moment, it is worth noting that D drone at the moment is seeing revenue explode 300% year every year with bookings up 500% D drone is actually a platform that axon purchase.
[04:25] So it's a company that they bought and they really want to accelerate the development of D drone technology. So basically, hey, there's a drone by this airport. It's not supposed to be there. Shoot it down. Right. And you take it down with either electromagnetic interference or some other form of D drone technology like using another drone to shoot it down just as an example.
[04:46] Right. I'm being extreme here with the and oversimplifying with the examples, but the point is technology to take down drones where they shouldn't be. We just had a few near misses of commercial aircrafts are coming into land and potentially struck or nearly struck drones as they were coming into land, including one where one of the pilots landing over at JFK argued that, hey, they think they just got hit by a drone.
[05:10] Nobody ended up finding any damage, but you know, that's just sort of like, you know, some loser flying a drone by an airport, which is obviously pretty stupid, but people do stupid things. Then there are also the nefarious types of drones, like we've heard plenty about when it comes to what Iran is doing. And Iran is even threatened sending and launching drones off the coast of California to strike targets inside of California.
[05:35] So a lot of police departments are starting to wake up that drones are going to be an issue in the future. The problem with drones, and this is where we actually get into the financials for the company, is if you jump into the earnings call, you can see right here, they say, I would say right now we're more limited by actual ability to scale and get the product out of the door than we are by opportunities out there.
[05:58] So that is unfortunately one of the downsides for the drone technology as cool as it is, they just can't actually develop it as fast as they need to to get it to all the police departments who want it. And that's why you're seeing these growth rates over here. Now you've got this enterprise adoption you've got D drone you've got AI booking surging 140% year over year with revenue jumping over 700% this is high margin revenue will jump into the margins in just a moment.
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[06:55] But something else to remember is they're also integrating artificial intelligence into their 911 call center technology. It's because they purchased another company that does 911 dispatching.
[07:08] And this now brings artificial intelligence ideally to speed up 911 dispatching police response, fire response and otherwise. And of course, axon takes a cut of all those emergencies now with that said let's actually get into the numbers here.
[07:24] So here are the numbers of the company. First thing that I want to look at here is what's going on with their margins. So margins have fallen a little bit unfortunately margins they explain have fallen a little bit because of tariffs right here tariffs and memory costs.
[07:42] Even though they think the memory costs are smaller and not that big of a deal memory costs as we've seen micron was just literally bragging about how memory prices are up three to four X, which just did an analysis on that this morning.
[07:56] And I thought it was mind blowing because when you look at micron it's like, man, that is one heck of a cycle when you could raise prices that much. Yep, here it is. Look at this. DRAM memory prices up 260% and NAND memory prices up 310%. That's a triple and a quadruple and pricing. It's crazy.
[08:16] So anyway, inclusism of that and the tariff impacts they are seeing a little bit of a hit to margins. But I have to say when I jump over here to the earnings, their margins are still really good. They're still making about 50 cents on every dollar for products that they sell and they're making 72 dollars out of every 100 dollars of services that they sell.
[08:40] These are really, really good margins right here. I really like these numbers. In fact, I would actually compare these service and product margins to Apple. I would go as far as calling this the Apple of policing and security.
[08:55] Look at this for a moment. Apple's products cost Apple 61% which means apples margins are only 39%. So if I write that over here, Apple has a 39% margin on products, right? That's a gross margin. So before they're operating expenses and on services, they obviously do a lot better on services. I have expenses of 7 to 2.4 billion divided by 30 billion.
[09:25] I got expenses of about 23 cents out of 100. So we're looking at about a 77 76.7% software margin. So if I compare that to axon over here, the services margins are very similar. 72% compared to 76% over at Apple and 39% at products compared to 49% on products over here.
[09:50] So they've definitely got pricing power with their product. Their costs are going up slightly. So in my opinion, that does suggest slightly falling pricing power, which isn't ideal. However, I will say, and I wrote it down here somewhere that I like this. I think it was under price and margin. Here we go. Love this.
[10:08] We want to be careful on pricing to make sure we're delivering more value before we take prices up. Now, you could slice this one of two ways. The bears were going to slice this and say, well, that's because they don't have pricing power. They can't raise the prices.
[10:20] The bulls were going to look at this and say, well, they're just trying to make sure they provide more value to their customers first and then they're going to raise prices. Like, for example, all the people who joined my courses on building your wealth over at me, Kevin.com, they didn't know they were going to get stock AI integrated into it.
[10:36] And now we've got this free, you know, even for members, all throughout the rest of the year, this is only accessible to members. And we might keep it free for a whole lot longer. But the point is, people who signed up for lifetime access to the course member live streams, the courses on building your wealth and the trade alerts,
[10:52] the short term medium and long term, alpha reports that we do every single morning, the people who signed up for this and got lifetime access to all of this and probably write it off, wrote it off on their taxes.
[11:04] And they got all of this in their membership. They were never advertised that they were going to get free access to the stock AI for at least the rest of the year, just pretty exciting in my opinion.
[11:16] And so in my opinion, like going back to axon, I like this. I like it when companies provide more value first and then worry about price later. A lot of people try to focus on price first and then providing value later. And I think that's backwards. That's kind of like making big promises like, oh yeah, this car is going to drive itself by the end of the year and then it doesn't.
[11:41] And we're going to be able to submit it to the robotaxi network by the end of the year and then you get because there is no robotaxi network. Now, I'm not trying to bag on Elon. Don't get me wrong. I love Elon. It's an inspiration that you could re-land rockets. I love Starlink. I love FSD and I think it's the greatest self-driving technology that's out there.
[12:00] But let's just say Elon has a little bit of a visionary outlook that you really have to discount heavily. And I think this company is doing the opposite. Now in fairness, maybe this company would have a much larger valuation if they just pump the stock baby like Elon does. Maybe I'm looking at it backwards.
[12:18] But anyway, their costs, we talked about their costs here. We do have operating expenses up about 19.7%, which is positive expansion of pricing power, which is good. It's just their costs of goods sold, mostly those tariffs that are hitting them a little bit. I do want to mention, they did recognize $189 million of other income.
[12:37] From an investment in venture capital, opportunity that I made, which means they were really frankly barely profitable. They only made about $29 million in the last three months here or the first three months of the year of 2026.
[12:51] And they lost money the first three months of 2025. I'm a little bit disappointed by this. I think a lot of this has to do with heavy stock compensation. So I do think there are some issues and downsides with the companies, this company, see like stock comp, it started to go down.
[13:07] But last year, we were in three months, we paid out 140 mil in three months here. We paid out 134 mil in our stock AI tool. You can actually see that year of year stock comp, stock comp went up 65.7%.
[13:22] They paid out almost half a billion, actually more than half a billion dollars of stock compensation. And we actually wrote that this was relatively high compared to revenue. So there was a significant dilution risk for shareholders, especially, I mean, they just diluted, you know, 5.4% of the company, especially since they're not buying back stock.
[13:42] Usually when software companies issue a lot of stock comp, they buy back a lot of stock and we're just not seeing that. Now, they're not raising money right now because they've got plenty of money on the balance sheet. As a result, they do have about two billion dollars of long term debt, plenty of money to pay off their short term cash.
[13:57] So, you know, okay, balance sheet, you've got some pros and cons going on with the business. I personally think memory prices and tariffs are going to be a tailwind that'll help this company in the long term.
[14:09] I think their balance sheet is okay. I think their pricing power is pretty good. It got to hit recently because of tariffs. But I think that will improve again. And if you actually compare their pricing power to Apple, it's pretty dang impressive.
[14:22] Now, when it comes to Wall Street forecasts for this company, Wall Street is forecasting that their earnings per share are going to grow by about 22% each year for the next four years.
[14:34] That gives them a fair price valuation in the high 400s. That's still higher than what Donald Trump paid for the company at 476, but it pushes them only to about 476, which does give them about 6.7% downside to fair value right now.
[14:51] I actually think the company is worth more because I think the company will grow faster. I think the company is likely to grow at 30% per year on an earnings per share basis.
[15:04] And that means my price target is actually up here at about $619. That's on a fundamental basis. I think we get a breakthrough of this down channel that the company lost over here, and this will end up being a support again for the company eventually will break out of this upper end as well.
[15:23] So I'm long term optimistic on it. I don't mind buying it anywhere below this channel over here because I think I've got 20, 30, 40% upside over the next year in the company, and even more over the next nine years thereafter.
[15:38] I am exposed to the company. For me, it's a 10 year play. It's a long term buying hold. So if it goes down more, I'm interested in buying more. I just want to be transparent. I own it. But this gives you a little bit of a view of this company that Donald Trump bought and why there's a little bit more. They are also doing what's called the AI era plan.
[15:57] And these are basically opportunities where they're going to blorge cities and they're booking 50 to 200 million dollar deals with big cities to, you know, which unfortunately can sometimes take them eight to 12 months to actually get implemented.
[16:13] And they're just now starting to see that sort of revenue because they say they announced AI era at the very end of 2024. They're just now off to a great start. But I mean, if you think about it, takes 12 months to get it up. This has really only been able to lap up for about six months now.
[16:32] So it's early at this company for how they are integrating artificial intelligence. Their margins are already starting off in the apple of security level and, and frankly, I think this is a recipient of AI wins and AI W's.
[16:48] Now, obviously, the stock performance has gotten hit over time. It's a $41 billion company here. And we've seen some damage to that stock performance, which isn't great. But it does create more of an opportunity to buy it probably because people are freaking out thinking that AI is going to destroy companies like this, whereas in my opinion, AI is going to enhance companies like that.
[17:11] Obviously, a big risk that you'll have to evaluate as well. Thanks so much for watching. Good luck. Go to meet Kevin.com and join us in the meet Kevin membership. And we'll see you in the next one. Goodbye. Why not advertise these things that you told us here? I feel like nobody else knows about this. We'll try a little advertising and see how it goes. Congratulations, man. You have done so much. People, a lot of you. People looked up to you. Kevin, path right there. Financial analyst and YouTube, but meet Kevin. Always great to get your take.