Wrap Technologies Stock Could Be the Future of Policing
Wrap Technologies Inc (Nasdaq: WRAP) is the company behind the BolaWrap. The BolaWrap is a police tool that operates like remote handcuffs or a lasso. From 10-25 feet, it can shoot a kevlar cord that wraps around a subject and subdues them. The BolaWrap fills a crucial need in the market and addresses the hot-button issue of police brutality. It’s already used in over 900 police agencies globally. While this sounds impressive, it’s still only 5% of the 18,000+ total agencies in the U.S. With this in mind, this could be the perfect time to buy Wrap Technologies stock before it really takes off.
What is Wrap Technologies?
According to its website, Wrap Technologies sees itself as the “Innovators of Modern Policing.” It currently only offers one product: the BolaWrap. However, this product fills a huge gap in the market.
Prior to the BolaWrap, police officers had six options to restrain a citizen:
- Verbal commands
- Pepper spray
- Bean bag shotgun
Of these six options, five of them rely on pain compliance. Essentially, police officers can try using verbal commands to subdue a suspect. If this doesn’t work the next option is to hurt the subject in hopes that they comply. Up until now, there is no method in between.
Pain compliance (AKA hurting the subject in hopes that they will comply) has two main problems. First, it causes serious pain to the citizen who oftentimes might be innocent. This can lead to lawsuits, or worse, accidental deaths. Second, pain compliance tends to escalate a situation further. This is because it triggers the subject’s flight or fight response.
Now, Wrap Technologies has introduced the only law enforcement tool that doesn’t rely on pain compliance. But does that mean that agencies are willing to incorporate it?
Wrap Technologies Sales
Wrap Technologies doesn’t list a price for the BolaWrap on its website. Instead, it prompts you to reach out and request a quote. However, in an interview, the founder stated that each BolaWrap costs about $1,000 per officer. This price includes the device, holster, at least one cord cartridge and training.
In 2021, Wrap Technologies reported annual revenue of $7.7 million, up 96% year-over-year (YOY). Some quick math tells us that Wrap sold approximately 7,700 BolaWraps in 2021. The actual number is probably a little lower since Wrap also makes money from training and selling cord cartridges. Its gross margin for this product is also a healthy 35.5%.
Training is also a big part of implementing the BolaWrap. In 2021, the number of trained law enforcement agencies increased to 940 total, up 109% YOY.
So, does this mean it’s a good time to buy Wrap Technologies stock?
Pros and Cons of Buying Wrap Technologies Stock?
Policing in America is a hot-button issue for many people. If you are someone who is passionate about non-violent alternatives for police then buying Wrap technologies is a great way to support the cause.
According to BolaWrap, it’s the only law enforcement tool that doesn’t rely on pain compliance. This means that it is carving out an entirely new product category. With that in mind, let’s examine the risks and rewards of buying Wrap Technologies stock.
- Word of mouth could help this product explode: The Boys in Blue are known for having a tight-knit culture. Due to the high-pressure nature of their work, police officers tend to be much closer than typical co-workers. There is also a mutual respect that extends across agencies. Due to this, it’s easy to see this product spreading like wildfire. If one police department finds success with the BolaWrap, they will quickly tell others about it.
- No competitors: As of now, Wrap Technologies has patented technology and no known competitors. This is according to its investor presentation.
- Subscription model: The BolaWrap uses the same business model as Gillette razors. It sells an expensive one-time base product that uses a refillable add-on. BolaWrap sells its device for $1,000. However, police departments will need to continuously re-order chord cartridges as they use them. This creates attractive recurring revenue for Wrap.
- Police budgets are large: $1,000 sounds like a lot of money for one tool. Luckily, police budgets are known to be somewhat unlimited. For example, the LAPD has a $1.9 billion budget. That’s plenty of money to buy BolaWraps.
- Military use: Right now, BolaWraps are primarily used by police officers. However, there is definitely the potential to expand down the road.
- Multi-beneficial: The BolaWrap is good for everyone involved. City council members, police chiefs, officers, and citizens all want to see less violence between police and civilians. If the BolaWrap proves to be effective in certain cities, it’s hard to imagine other cities not adopting it.
- No lawsuits (so far): No subjects have sued after being BolaWrapped.
- Cheap: Wrap technologies stock currently trades for under $3 per share.
- The company is still unprofitable: Wrap reported a $24.5 million net loss in 2021. This was on a profit of just $7.7 million. This loss is mainly attributed to $20.3 million in selling, general and administrative expenses. However, Wrap did not give specifics on what this means.
- Decreasing net income: In 2019, Wrap reported a net loss of $8.3 million. By 2021, this loss nearly tripled to $24.5 million.
- Easily copied: BolaWrap is currently the only product of its kind on the market. However, as with any good idea, it’s likely that BolaWrap will likely be copied very soon.
- Looking for a new CEO: Wrap Technologies was founded by Scot Cohen. Scot is the same man who founded the taser. However, Wrap is currently looking for a new CEO. Depending on who it hires, this could end up being a positive. But, for now, the uncertainty is a net negative.
- Lower 2022 guidance: The company did not release official guidance for 2022. However, it stated that its CEO search, geopolitical uncertainty and COVID-19 could lead to softer 2022 sales. It still expects YOY growth.
- “Defund the police” sentiment: A growing “defund the police” attitude is growing in the United States. Down the road, this could lead to less budget for expensive tools like the BolaWrap.
Should You Buy Wrap Technologies Stock?
At the end of the day, Wrap Technologies stock is a great example of innovation. For decades, police brutality has been a major issue in America. This is partly because there are thousands of interactions every day between police officers and citizens. Inevitably, some of them escalate in unfortunate ways.
With that said, one of the biggest problems has always been a lack of a middle ground between talking and violence. When talking to a subject doesn’t work then the next option is for the police officer to use force. This force can be with a baton, pepper spray, taser, or something else. The thing is that people tend to panic when getting tased, pepper-sprayed, or hit with a baton. The subject wants to run away or fight back. This causes the entire situation to escalate. However, the BolaWrap creates a very exciting alternative.
After watching videos of the BolaWrap in action, it’s clearly effective. It shoots a cord that instantly wraps around the subject’s arms or legs. This completely subdues them so that they pose no threat. However, it also doesn’t hurt the subject at all.
Right now, Wrap Technologies seems to be gaining solid momentum with agencies. However, its $24.5 million net loss is concerning. It’s not uncommon for younger companies to lose money. It would just be reassuring to know specifically where this money is going. Either way, Wrap Technologies is definitely worth keeping an eye on as it continues to grow in popularity.
I hope that you’ve found this article valuable when it comes to learning about Wrap Technologies stock! Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.