Why Axon Enterprise Stock Was Falling Today

Key Points

• Axon said it would acquire Prepared, an emergency communications company, yesterday.

• The price was estimated to be $800 million-$900 million.

• While the deal makes sense over the longer term, Axon's spending is up this year.

• 10 stocks we like better than Axon Enterprise ›

Shares of Axon Enterprise (NASDAQ: AXON) were heading lower today in a sell-off that picked up as the session went on.

The pullback seemed to be a response to the company's announcement yesterday that it was acquiring Prepared, an artificial intelligence (AI)-powered 911 communications company.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

As of 2:58 p.m. ET, the stock was down 8.8%, even as it received a bullish analyst note from Piper Sandler last night.

Image source: Axon Enterprise.

What's happening with Axon?

The sell-off is surprising, but it's not entirely unusual for an expensive stock to fall on news of an acquisition, as investors may be wary of the company overspending, especially with markets at all-time highs.

Axon said yesterday that it would acquire Prepared, an AI-based communications platform that converts 911 calls into actionable intelligence, leading to a faster response.

In the press release announcing the deal, Axon did not say how much it was paying or how it would pay for Prepared, though The Information reported a price tag of around $800 million-$900 million.

The acquisition fits in well with Axon's overall business and mission, and the strategic rationale makes sense. It can fold Prepared into its software portfolio and sell it alongside its other products in a complementary way.

However, Axon's profits have been falling this year as it invests in new AI technology and continues to spend heavily on share-based compensation, which makes up roughly 20% of revenue.

Despite the long-term logic for the Prepared deal, short-term traders may be taking the opportunity to sell the high-priced stock.

Some good news for Axon

Last night, Piper Sandler initiated coverage of the stock with an overweight rating and a price target of $893, noting its history of product innovation and large total addressable market.

That assessment looks generally correct, despite the sell-off in the stock. Long-term investors should look past the pullback, as it looks more like the volatility that often comes with an expensive stock.

The acquisition should pay off over the long run.

Should you invest $1,000 in Axon Enterprise right now?

Before you buy stock in Axon Enterprise, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Axon Enterprise wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,110!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,093,751!*

Now, it’s worth noting Stock Advisor’s total average return is 1,064% — a market-crushing outperformance compared to 190% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 22, 2025

Jeremy Bowman has positions in Axon Enterprise. The Motley Fool has positions in and recommends Axon Enterprise. The Motley Fool has a disclosure policy.