Axon Enterprise Plummets 2.7%: What's Fueling the Selloff as Earnings Loom?

Summary
• Axon Enterprise (AXON) tumbles 2.72% to $734.94 amid pre-earnings jitters.
• XTX Topco Ltd’s 1,119.8% stake increase contrasts with today’s intraday volatility.
• Analysts upgrade price targets, but short-term technical indicators signal caution.

As Axon Enterprise’s shares plunge to a 2025 low of $728.00, the stock’s sharp decline raises questions about its near-term trajectory. With earnings due on August 4, market participants are scrutinizing whether recent analyst optimism and strategic partnerships can offset today’s bearish momentum. The stock’s 30-day support at $727.31 and 200-day resistance at $552.92 highlight a critical juncture.

Earnings Anticipation and Analyst Hype Drive Volatility
Axon’s selloff reflects a tug-of-war between pre-earnings caution and conflicting analyst narratives. While XTX Topco’s $2.18 million stake increase and 11 buy ratings suggest long-term confidence, technical indicators like the RSI (58.20) and MACD (-7.05) hint at near-term exhaustion. The stock’s 31.3% YoY revenue growth and $1.41 EPS outperformance in Q1 2025 contrast with today’s 2.7% drop, underscoring investor skepticism ahead of August 4’s report. Analysts’ $772.08 average target implies potential upside, but intraday volatility—driven by a 1.29 beta and $255,196 turnover—suggests mixed signals between bullish fundamentals and bearish short-term sentiment.

Defense Sector Stability Contrasts with AXON’s Volatility
The Aerospace & Defense sector, led by Lockheed Martin’s 0.25% rise, remains relatively stable amid geopolitical tensions and defense spending hikes. AXON’s 2.7% drop diverges from peers like LMT and NOC, which trade higher. This disconnect highlights AXON’s unique exposure to earnings expectations and product innovation risks, such as its recent focus on law enforcement tech partnerships. While sector-wide demand for defense tech remains robust, AXON’s selloff reflects its higher beta and investor focus on near-term execution risks.

Technical Indicators and ETFs Signal Caution as Earnings Loom
• 200-day average: $626.52 (below current price)
• RSI: 58.20 (neutral to bearish)
• MACD: -7.05 (negative momentum)
• Bollinger Bands: $691.79 (lower) to $807.02 (upper)

With earnings approaching, key levels to watch are the 30-day support at $727.31 and 200-day resistance at $552.92. The RSI’s 58.20 suggests oversold conditions, but the MACD’s negative divergence warns of potential further declines. No leveraged ETFs are available for AXON, but investors might consider hedging with short-term puts if volatility spikes pre-earnings. The options chain is empty, but a 5% downside scenario to $698.19 would see put premiums gain value. Aggressive traders could target a bounce above $749.40 (30-day SMA) for a short-term rebound.

Backtest Axon Enterprise Stock Performance
AXON has a history of positive short-to-medium-term gains following a -3% intraday plunge. The 3-Day win rate is 56.44%, the 10-Day win rate is 61.34%, and the 30-Day win rate is 63.70%, indicating a higher probability of positive returns in the immediate aftermath of such events. The maximum return during the backtest period was 13.68%, which occurred on day 59, suggesting that there is potential for significant gains even after a substantial intraday decline.

Axon’s Earnings Report Could Define Its Next Move—Here’s What to Watch
The coming week will be pivotal for AXON as its August 4 earnings report tests whether its 31.3% YoY revenue growth and product innovations can justify the $734.94 current price. Technical indicators suggest a critical support level at $727.31, with a break below threatening the 200-day MA at $626.52. Meanwhile, the sector’s stability—led by LMT’s 0.25% rise—offers context for AXON’s divergence. Investors should prioritize earnings guidance and cash flow metrics over short-term volatility. If the report exceeds $1.41 EPS expectations and confirms 2025 growth targets, the stock could reclaim its 52-week high of $830.21. For now, watch the $727.31 support level and sector leader LMT’s performance as key barometers for AXON’s next move.