Why Axon Enterprise Stock Is Plummeting Today

Axon Enterprise (NASDAQ: AXON) stock is getting hit with a sharp valuation pullback in Wednesday's trading. The company's share price was down 12.1% as of 11:15 a.m. ET, and had been off as much as 20.7% near the market open.

Axon published its third-quarter results yesterday afternoon, reporting sales that topped Wall Street's forecast but earnings that fell short of the average analyst target. Investors were also looking for stronger forward guidance.

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Axon stock sinks on Q3 earnings miss

Axon notched non-GAAP (generally accepted accounting principles) adjusted earnings per share of $1.17 on revenue of $710.64 million. While the company's revenue topped Wall Street's target by roughly $5.8 million, adjusted earnings per share came in $0.37 lighter than anticipated. Axon continued to post strong sales growth, with Q3 revenue increasing 30.6% year over year, but weaker-than-expected margins are prompting a big sell-off for the stock.

What's next for Axon?

Axon is guiding for Q4 revenue to come in between $750 and $755 million. With the target, the company is now guiding for full-year revenue of approximately $2.74 billion -- beating the average Wall Street analyst target for sales of $2.72 billion. On the other hand, the company's target for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $178 million and $182 million appears to have left investors underwhelmed.

With its Q3 report yesterday, Axon also announced that it will be acquiring Carbyne -- a public-safety tech specialist. Axon is paying $625 million to acquire the company, and the deal is expected to close in next year's first quarter.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Axon Enterprise. The Motley Fool has a disclosure policy.