Shares of Axon Enterprise, Inc. (NASDAQ: AXON) tumbled 19.38% in pre-market trading on Wednesday, following the company's disappointing third-quarter earnings report and the announcement of a significant acquisition. The maker of Taser stun guns and body cameras faced a sharp investor backlash as it missed profit expectations despite beating revenue estimates.

Axon reported adjusted earnings per share of $1.17 for Q3, falling significantly short of analysts' expectations of $1.54. This earnings miss overshadowed the company's impressive revenue growth of 31% year-over-year to $711 million, which surpassed the consensus estimate of $704.83 million. The company attributed the profit shortfall to increased hiring costs to support business expansion and higher stock-based compensation expenses.

Adding to investor concerns, Axon announced plans to acquire Carbyne, an emergency communications and response platform, in a deal valuing Carbyne at $625 million. While the acquisition aims to enhance Axon's 911 response capabilities, the timing alongside the earnings disappointment amplified worries about the company's financial management and future profitability. Despite raising its full-year 2025 revenue outlook to about $2.74 billion, the market's negative reaction suggests that investors are increasingly focused on Axon's ability to translate strong top-line growth into proportional bottom-line results.