The Wall Street Journal Online (paid subscription required) has an article under its Shareholder Scoreboard dated February 28, 2005 on Best 3-Year/1-Year Performer: Taser International, which details the remarkable growth Taser stock has enjoyed, but also indicates that safety concerns (see our February 12, 2005 post On Taser Guns) are becoming a problem for the company, which manufactures Taser Guns.
Some have made a fortune on Taser International stock. As WSJ indicates:
With a total return of 361.1% in 2004, the value of $1,000 invested at the end of 2003 rose to $4,611 a year later. A similar investment in the Standard & Poor's 500-stock index would have risen to $1,109.
Over three years, Taser's stock returned a compound annual average of 202.3%. The value of $1,000 invested in Taser at the end of 2001, the year the company went public, would have been $27,623 on Dec. 31, 2004, compared with $1,112 for the S&P 500. As good as it was, last year's return paled compared with the 1,938.7% return that Taser handed investors in 2003, when its market capitalization wasn't big enough to be included among the 1,000 companies in the Scoreboard.
Those are formidable figures by any account. But Taser stock has plunged nearly 50% this year as the safety concerns, stockholders suits over alleged misrepresentations as to the safety of Taser Guns, and the SEC's launching of an informal inquiry into Taser's public statements about its products' safety and its dealings with a large distributor take a toll on the company's momentum.
The article quotes Brian Ruttenbur, an analyst at Morgan Keegan in Nashville, Tenn.:
"A year ago, there were safety concerns, but investors didn't care that much because revenue was picking up," Mr. Ruttenbur says. "Once momentum turns against you, everything gets piled on. Taser is a momentum stock that has broken."
If the safety issues that have been raised as to Taser Guns hold any truth (and even some police departments are worried that they do), then Taser Guns and like products should be taken off the market. Taser International vows that it stands by studies as to the guns safety, and that it will defend itself vigorously from the lawsuits.
My primary concern about Taser Guns and like weapons is that they are there to be used as an alternative to firearms, but that officers may be tempted to use them in situations were they would never dream of using a firearm simply because they figure the Taser Gun is safe.