Fundamental comparison
Wrap Technologies (WRAP) posted a 12 % YoY rise in Q2 revenue (≈ $45 m) and widened its gross margin to ~55 %, up from 50 % a year ago. Operating margin also ticked higher, reaching ≈12 % versus 5 % in Q2‑2024. By contrast, the two biggest peers in the non‑lethal‑weapon/security‑tech space—Axon Enterprise (AXON) and Safariland (a private‑equity‑backed player)—showed more modest top‑line momentum: Axon’s Q2‑2025 revenue grew 8 % to $2.1 bn, with a gross margin of 48 % and operating margin of 9 %; Safariland’s revenue was essentially flat and its gross margin lingered in the low‑40 % range. Even LEO‑focused SaaS rivals such as ShotSpotter (now part of Motorola Solutions) posted ~5 % revenue growth and margins that lag behind Wrap’s 55 % gross benchmark. In short, Wrap is out‑pacing its competitive set on both the top‑line and profitability fronts, reflecting the impact of its recent cost‑reduction program and higher‑margin product mix (e.g., the new wireless containment systems).
Trading implications
The earnings beat, coupled with a clear margin expansion advantage, creates a short‑term bullish catalyst for WRAP. The stock is trading just above its 200‑day moving average, with the price holding a support level near $12.50 and the 50‑day MA around $13.20. Relative strength (RSI ≈ 62) suggests modest upside momentum but still room for a pull‑back to test the $12.50 floor before a potential breakout. Given the superior growth‑margin profile, a buy‑on‑dip for investors seeking exposure to the expanding non‑lethal‑technology market appears reasonable, especially if the stock can stay above $13.00 (the next resistance). However, the valuation remains elevated (≈ 30× forward EBITDA), so risk‑averse traders may prefer a tight stop around $12.20 or wait for a clearer confirmation of a higher low (e.g., a close above $13.50) before adding size. Keep an eye on upcoming guidance for Q3‑2025 and any macro‑policy shifts affecting law‑enforcement budgets, as those will dictate the sustainability of Wrap’s edge over its peers.