StockNovice (Joe) Date: 2026-04-28 Quarter: Q4 FY25 (refresh post Axon Week 2026 + 33% drawdown)
Spanky-wave GIF goes here. This is a refresh on my Feb 25 review. Same quarter, different price tag, plus Axon Week is now in the rearview. Going to write this one with the discipline that matters most when a starter you sized up gets cut by a third — keep the reasoning honest, don't argue with the data, and don't argue with the price either.
I sized AXON up to a 5-8% starter on Feb 25 after the Q4 print blew the doors off — $797M revenue, $7.4B annual bookings, $14.4B FCB, NRR 125%, 2028 targets unveiled. Three of my four watch items hit. Thesis was Strengthening.
Today, two months later:
So the question for me — the only question that matters — is whether the data has changed or only the price has changed. Let me be honest about it.
Two months ago I argued AXON's "is" case was already strong: dominant share, $1.35B ARR growing 35%, NRR 125%, $14.4B contracted backlog, four consecutive 30%+ years. Nothing in the last 60 days has weakened the "is" — if anything, Axon Week strengthened the "could be":
What's now closer to "is" than two months ago:
Still in "could be":
The "is" case keeps fattening. That's the opposite of what a thesis-break looks like.
Here's how I'm thinking about it. I've been around long enough to know two things about high-quality compounders:
They don't drop 33% on bad fundamentals when bookings just hit a record. They drop on multiple compression — sentiment, sector rotation, growth de-rate. That's what this is. EV/TTM Rev went from ~14x at print to ~11.7x today. FY26 EV/Rev ~9.0-9.2x. The numerator (price) moved; the denominator (revenue) is on track to grow 30%+.
The "one more quarter" trap is real, and so is its inverse. The one I've made before is holding too long when fundamentals deteriorate, telling myself the next quarter will fix it. The inverse trap — selling a high-quality name into a multiple compression because price action makes me nervous — is just as expensive. Probably more expensive over a career.
What would actually break my thesis right now? Things I'd need to see, none of which are on the table:
None of these are happening. So the drawdown is what it is: a price re-rating on a name that hasn't earned a thesis cut.
Quick honest scoring of my Feb 25 review:
Right:
Missed / Underweighted:
| Watch Item | Feb 25 Status | April 28 Status |
|---|---|---|
| Federal Q4 delivery | Hit ($7.4B bookings +46%) | Confirmed |
| SBC trajectory declining | Hit (FY26 17% vs FY25 22%) | On track per FY26 guide |
| Net new ARR reversal | Hit ($95M vs $69M Q3) | Single quarter — needs Q1 to confirm |
| GAAP operating margin positive | Miss | Still negative; FY26 the test |
Not a single watch item has gotten worse. One (GAAP op margin) is still the long-term pending question. Three are tracking.
Starter at 7% — held through drawdown. Willing to add to 9-10% on Q1 FY26 confirmation.
Specifically what I'm waiting for:
If those three hit, the position goes from 7% to 9-10%. If two of three hit, hold here. If only one hits, trim back to 5%.
I'm not selling on price action alone. That's the discipline I'm trying to build — distinguishing between a thesis breaking and a multiple compressing. They're not the same thing, and they don't deserve the same response.
Three things I'd flag honestly:
Tariff persistence. Q4 GM compression was partly structural (Platform Solutions mix) and partly tariff-driven. If tariffs stay where they are or escalate, the gross margin headwind becomes a multi-year drag. The 2028 target of 28% Adj EBITDA assumes margin expansion that tariffs make harder.
Multiple compression continuation. At ~11.7x EV/Rev, AXON is still premium. If the market keeps de-rating high-multiple growth, AXON could see another 20-25% downside before a fundamental floor kicks in. I have to be honest that owning a 7% position through that move is going to feel terrible. I've talked myself into holding through it; I haven't actually held through it yet.
M&A integration concurrency. Prepared, Carbyne, Fusus, Dedrone all integrating in parallel while launching three new product lines (Vision, Assistant expansion, Body Mini) and ramping a 911 platform. The execution surface area is enormous. Q1 FY26 will tell me whether the integration math is working or whether something is being dropped.
| Dimension | Feb 25 Belief | April 28 Update | Direction |
|---|---|---|---|
| Revenue durability (30%+ for 3 yrs) | Yes — backlog supports | Strengthened — FCB +$3.0B QoQ; AI Era stack shipping | Up |
| Moat quality | Strong | Strengthened — Vision delivers ALPR natively, weakens Flock dependency | Up |
| Management credibility | Trust point established (federal Q4) | Strengthened — Axon Week deliveries on schedule | Up |
| GAAP profitability path | Uncertain — SBC must compress | Same — FY26 SBC guide on track but GAAP op margin still negative | Flat |
| SBC dilution risk | High concern | Mitigated by FY26 guide trajectory | Down |
| Valuation | Stretched at 12x | Compressed to 11.7x — better entry profile | Down |
| Multiple compression risk | Underweighted | Now realized; further downside possible | Up |
| Net thesis | Intact, Strengthening | Intact, Strengthening — drawdown is price not data | Flat |
The hardest part of holding a position through a 33% drawdown is not the position — it's all the second-guessing it generates. The thing I keep coming back to: bookings are at a record, ARR is at a record, NRR is at a record, AI products are shipping on time, and the 2028 target frame is intact. The price doing what the price does isn't a thesis input. The data is.
Holding 7%. Adding back to 9-10% if Q1 FY26 hits the three-of-three checklist above. Trimming to 5% only if the data starts to break.
As usual, thanks for reading.