Shares of Axon Enterprise declined sharply Tuesday and were the worst performers in the S&P 500 after the Taser maker announced plans to raise $1 billion, and potentially more, in debt.
Investors reacted negatively to the plan as shares fell 8.6%, their worst session since Aug. 7,. The stock has fallen 21% this year.
Axon disclosed a proposed offering of $1 billion in convertible senior notes set to expire in 2031, with underwriters granted the option to purchase an additional $150 million. Goldman Sachs, Morgan Stanley, JPMorgan Securities, RBC Capital Markets, and Citigroup will be serving as joint managers of the offering.
Some of the proceeds will fund general corporate purposes, including Axon's growth and potential acquisitions or investments, the company said.
Axon has faced broader concerns about disruption by artificial intelligence and a decline in operating income throughout fiscal 2025, and shares have declined 41% over the last 12 months.
While shares dropped Tuesday, Wall Street has held a bullish view on the stock. Of the 23 firms polled by FactSet, Axon stock has an average Buy rating with a price target of $726.56, a 48.2% upside of its Monday closing price of $490.18.
Morgan Stanley analysts wrote Axon's AI offerings presented an opportunity for incremental growth and the potential to expand to more of its services.
Traders praised Axon's expansion into AI services earlier this year after it unveiled AI tools to help police officers generate reports. The company disclosed a 700% surge in subscriptions for its AI tools through its second quarter in August.
In May, the company reported a spike in international sales as its operating income turned positive after five consecutive quarters of losses. President Josh Isner said Axon was "showing up more of a global company at this point" as its non-U.S. business accounted for one-fifth of its total revenue.
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