Word: tasers
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Dates: during 2000-2009
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When Brad Koteshwar, a private investor in Scottsdale, Ariz., decided to sink $6,000 into the stock of a hot local company, stun-gun maker Taser International, in January 2004, he knew it was risky. The stock price had already soared nearly 2000% in 2003, and that kind of phenomenal growth just can't last forever. "We got in a little late," admits Koteshwar, who with his wife Sheila also holds seminars and publishes a newsletter on stock investing. But police departments from Kansas City, Mo., to San Jose, Calif., were placing large orders for Taser's weapons, which emit...
Amazingly, Koteshwar was able to cash out with $18,000 in profit after just four months. Taser went on to become the best-performing stock of 2004, more than quadrupling in price--despite the emergence of a potentially chilling scandal in late November: Amnesty International issued a 93-page report detailing 74 deaths in the U.S. and Canada of people who had been hit with a Taser, and calling for a moratorium on the weapons until more independent medical-safety studies were conducted. Yet after a brief stall, Taser's stock continued its upward climb, hitting an all-time high...
...then the stock abruptly hit a wall. Just days after the company wrapped up its best year ever, with $68 million in revenues, the SEC and the Arizona attorney general announced informal investigations of the company, and Taser warned shareholders that the pace of new orders might slow down. In the first 11 days of January, Taser's shares lost nearly 60% of their value...
...things get so bad so fast? "The problem with a stock like this is that it attracts fanatics," says Brian Ruttenbur, an analyst at Morgan Keegan. Enthusiasts, says Ruttenbur, treated Taser like a dotcom, sending its price soaring, even though the company posted just $4.4 million in earnings in 2003. The company's rapid growth--some 10% of the nation's 1.1 million officers now have a stun gun--led investors to hope that soon every police officer would get a Taser, just as most carry batons and pepper spray...
Giuliani insists that his protégé's withdrawal is solely about the nanny problem--and not about the cacophony of other issues that surfaced, like Kerik's recent $6.2 million windfall from exercising stock options in Taser International, a stun-gun company on whose board he serves and which does business with the Department of Homeland Security. Kerik never warned the Bush Administration about a potential nanny issue, a senior official says. "He's a workaholic. These are things he doesn't concentrate on," says Giuliani. When Kerik called the White House to tell them of the problem...