XII
Detailed Valuation Scenarios
================================================================================ VALUATION SCENARIOS - DISCOUNTED CASH FLOW (DCF) ANALYSIS ================================================================================ Using default growth rates due to calculation error: '>' not supported between instances of 'NoneType' and 'int' Stock: AXON Current Price: $414.20 Shares Outstanding: 0.08B (76,254,776 shares) Base Year FCF (FY 2024): $0.3B (from financial statements) -------------------------------------------------------------------------------- BEAR CASE (Probability: 25%) Conservative: Below-trend growth, elevated risk premium, modest recession impact ASSUMPTIONS: • FCF Growth Rate (Years 1-10): 3.0% • Discount Rate (WACC): 12.0% • Terminal Growth Rate: 2.0% 10-YEAR FCF PROJECTION: Year FCF ($M) PV Factor PV of FCF ($M) ------------------------------------------------------------ 1 $ 310,676,016 0.8929 $ 277,389,300 2 $ 319,996,296 0.7972 $ 255,099,088 3 $ 329,596,185 0.7118 $ 234,600,055 4 $ 339,484,071 0.6355 $ 215,748,264 5 $ 349,668,593 0.5674 $ 198,411,350 6 $ 360,158,651 0.5066 $ 182,467,581 7 $ 370,963,410 0.4523 $ 167,805,008 8 $ 382,092,313 0.4039 $ 154,320,677 9 $ 393,555,082 0.3606 $ 141,919,908 10 $ 405,361,735 0.3220 $ 130,515,630 ------------------------------------------------------------ Total PV of 10-Year FCF: $1,958,276,861 TERMINAL VALUE: • Year 11 FCF: $413,468,969 • Terminal Value: $4,134,689,692 • PV of Terminal Value: $1,331,259,423 VALUATION SUMMARY: • Enterprise Value: $3.3B • Shares Outstanding: 0.08B • Intrinsic Value per Share: $43.14 • Current Price: $414.20 • Upside/Downside: -89.6% • Margin of Safety: -860.2% -------------------------------------------------------------------------------- BASE CASE (Probability: 50%) Balanced: Sustainable growth trajectory, market-appropriate discount rate, realistic perpetuity assumptions ASSUMPTIONS: • FCF Growth Rate (Years 1-10): 7.0% • Discount Rate (WACC): 10.0% • Terminal Growth Rate: 2.5% 10-YEAR FCF PROJECTION: Year FCF ($M) PV Factor PV of FCF ($M) ------------------------------------------------------------ 1 $ 322,741,104 0.9091 $ 293,401,004 2 $ 345,332,981 0.8264 $ 285,399,158 3 $ 369,506,290 0.7513 $ 277,615,545 4 $ 395,371,730 0.6830 $ 270,044,212 5 $ 423,047,751 0.6209 $ 262,679,370 6 $ 452,661,094 0.5645 $ 255,515,387 7 $ 484,347,371 0.5132 $ 248,546,785 8 $ 518,251,687 0.4665 $ 241,768,237 9 $ 554,529,305 0.4241 $ 235,174,557 10 $ 593,346,356 0.3855 $ 228,760,706 ------------------------------------------------------------ Total PV of 10-Year FCF: $2,598,904,959 TERMINAL VALUE: • Year 11 FCF: $608,180,015 • Terminal Value: $8,109,066,864 • PV of Terminal Value: $3,126,396,313 VALUATION SUMMARY: • Enterprise Value: $5.7B • Shares Outstanding: 0.08B • Intrinsic Value per Share: $75.08 • Current Price: $414.20 • Upside/Downside: -81.9% • Margin of Safety: -451.7% -------------------------------------------------------------------------------- BULL CASE (Probability: 25%) Optimistic: Strong execution, market share gains, operating leverage, sustained competitive advantages ASSUMPTIONS: • FCF Growth Rate (Years 1-10): 12.0% • Discount Rate (WACC): 9.0% • Terminal Growth Rate: 3.0% 10-YEAR FCF PROJECTION: Year FCF ($M) PV Factor PV of FCF ($M) ------------------------------------------------------------ 1 $ 337,822,464 0.9174 $ 309,928,866 2 $ 378,361,160 0.8417 $ 318,459,018 3 $ 423,764,499 0.7722 $ 327,223,945 4 $ 474,616,239 0.7084 $ 336,230,109 5 $ 531,570,187 0.6499 $ 345,484,149 6 $ 595,358,610 0.5963 $ 354,992,887 7 $ 666,801,643 0.5470 $ 364,763,333 8 $ 746,817,840 0.5019 $ 374,802,691 9 $ 836,435,981 0.4604 $ 385,118,361 10 $ 936,808,299 0.4224 $ 395,717,949 ------------------------------------------------------------ Total PV of 10-Year FCF: $3,512,721,310 TERMINAL VALUE: • Year 11 FCF: $964,912,548 • Terminal Value: $16,081,875,794 • PV of Terminal Value: $6,793,158,131 VALUATION SUMMARY: • Enterprise Value: $10.3B • Shares Outstanding: 0.08B • Intrinsic Value per Share: $135.15 • Current Price: $414.20 • Upside/Downside: -67.4% • Margin of Safety: -206.5% -------------------------------------------------------------------------------- ================================================================================ SENSITIVITY ANALYSIS - Intrinsic Value per Share ================================================================================ How intrinsic value changes with different growth and discount rates: Growth → 3% 5% 8% 10% 12% 15% WACC ↓ ------------------------------------------------------------------ 8% $ 77↓ $ 90↓ $ 113↓ $ 132↓ $ 155↓ $ 195↓ 9% $ 65↓ $ 75↓ $ 94↓ $ 110↓ $ 128↓ $ 160↓ 10% $ 56↓ $ 65↓ $ 81↓ $ 94↓ $ 108↓ $ 135↓ 11% $ 49↓ $ 57↓ $ 70↓ $ 81↓ $ 94↓ $ 116↓ 12% $ 44↓ $ 51↓ $ 62↓ $ 72↓ $ 82↓ $ 101↓ Current Price: $414.20 Base FCF: $301,627,200M Terminal Growth: 2.5% (constant) Legend: ↑ = 30%+ upside | ↓ = 10%+ downside ================================================================================ ================================================================================ PROBABILITY-WEIGHTED VALUATION ================================================================================ Bear Case (43.14) × 25% = $10.79 Base Case (75.08) × 50% = $37.54 Bull Case (135.15) × 25% = $33.79 ======================================== Weighted Average Intrinsic Value: $82.11 Current Price: $414.20 Upside/Downside: -80.2% Margin of Safety: -404.4% ================================================================================