Shares of Axon Enterprise Inc. (NASDAQ:AXON) plummeted 20.83% in after-hours trading on Tuesday following the release of the company's third-quarter earnings report, which revealed mixed results and an acquisition announcement.

While Axon reported Q3 revenue of $711 million, surpassing analyst estimates of $704.83 million, the company's earnings per share fell short of expectations. Axon posted an adjusted EPS of $1.17, significantly below the consensus estimate of $1.54, disappointing investors and likely contributing to the sharp stock decline.

Despite the earnings miss, Axon's CEO highlighted the company's strong top-line performance, stating, "Axon delivered another record quarter, with revenue growing 31% year over year." However, this positive revenue growth was overshadowed by the substantial earnings shortfall.

Adding to the mix of news, Axon announced plans to acquire Carbyne, a cloud infrastructure and AI company focused on modernizing the 911 emergency response system. While strategic acquisitions can often be viewed positively, the timing of this announcement alongside the earnings miss may have amplified investor concerns about the company's financial management and future profitability.

Looking ahead, Axon provided Q4 revenue guidance in the range of $750 million to $755 million, slightly above the FactSet consensus estimate of $746.2 million. However, this forward-looking guidance did not appear to assuage investor worries in the face of the significant earnings miss.

The after-hours plunge reflects a stark shift in investor sentiment towards Axon, as the market grapples with the company's ability to translate strong revenue growth into proportional bottom-line results. As trading opens on Wednesday, all eyes will be on Axon to see if the stock can recover from this steep decline or if concerns about profitability will continue to weigh on investor confidence.